Supplementation of rat hepatocytes with various fatty acids in the culture medium reduced the conversion of [3H]phosphatidylethanolamine into phosphatidylcholine. Unsaturated fatty acids were the most effective inhibitors of phospholipid methylation. The inhibition of phosphatidylethanolamine methylation by oleate (2 mM) was reversed within 1 h after replacement with fatty acid-deficient medium. Fatty acids and their CoA derivatives (0.15-0.5 mM) produced 50% inhibition of phosphatidylethanolamine methyltransferase in rat liver microsomes. The first methylation reaction was the site of fatty acid inhibition, as methylation of phosphatidyl-N-monomethylethanolamine and phosphatidyl-N,N-dimethylethanolamine was not reduced in the presence of oleate. The inhibition by oleate was reversed by inclusion of bovine serum albumin or by addition of phospholipid liposomes. Thus, while fatty acids stimulate phosphatidylcholine biosynthesis in hepatocytes via the CDP-choline pathway, the methylation pathway is inhibited.