We have previously shown that glucose metabolism plays an important role in modifying intestinal fatty acid esterification. Because it is well known that glucose metabolism is under insulin regulation, we examined the effect of insulin on intestinal fatty acid esterification. Insulin pretreatment led to a marked decrease in in vitro intestinal fatty acid esterification, but this decrease was abolished by maintaining blood glucose above 80 mg/dl. Addition of insulin to the incubation medium failed to produce any effect on intestinal fatty acid esterification. The decreased fatty acid esterification on hypoglycemic rats was not associated with changes in fatty acid uptake or lipid esterifying enzyme activities. However, there was a significant increase in the production of volatile metabolites of fatty acid. We conclude that 1) insulin itself has no effect on intestinal fatty acid esterification, 2) the effects observed in this study are due to insulin-induced hypoglycemia, 3) hypoglycemia does not alter intestinal fatty acid uptake or intrinsic esterification activity, but leads to preferential oxidation rather than esterification of fatty acid by the small intestine, and 4) the critical blood glucose concentration needed to maintain normal esterification in the rat was approximately at 80 mg/dl.