The syntheses of triglyceride and its precursors were increased when liver homogenates of ketotic diabetic rats were incubated with [U-14C]-glycero 3-phosphate and cofactors. Triolein sonicates produced a concentration-dependent inhibition of the synthesis of both diglyceride and triglyceride, whereas monoolein sonicates had no effect. Rat serum very low density lipoproteins, like triolein sonicates, inhibited the synthesis of diglyceride and triglyceride. Furthermore, the intracellular form of very low density lipoproteins, namely nascent very low density lipoproteins, also inhibited the synthesis of diglyceride and triglyceride. A higher apparent I50 (concentration of inhibitor that produces 50% inhibition of activity) was observed in liver homogenates of ketotic diabetic rats for inhibition of triglyceride or diglyceride synthesis by triolein sonicates, serum very low density lipoproteins, high density lipoproteins, and nascent very low density lipoproteins. Insulin treatment of the diabetic rats reversed the I50 values to control. In studies on the site of inhibition of triglyceride synthesis in the overall biosynthetic pathway, serum very low density lipoproteins produced a concentration-dependent inhibition of liver cytosolic phosphatidate phosphohydrolase activity. A higher I50 value was obtained with the hepatic enzyme of the diabetic rats. This higher I50 value was reversed to control by insulin treatment of the diabetic rats. These results indicated that the activity of this enzyme was less sensitive to inhibition by very low density lipoproteins in the ketotic diabetic state. The reduced sensitivity of phosphatidate phosphohydrolase activity to triglyceride inhibition observed in the present studies could explain our previous observation of an increased rate of triglyceride synthesis in ketotic diabetic liver homogenates.