Hepatic fatty acid biosynthesis and the activity of phosphatidate phosphatidate phosphohydrolase, the rate-limiting enzyme of triacylglycerol biosynthesis, were studied after hypoxic periods of 1 and 7 days under hypobaric conditions at 40.8 kPa. Phosphatidate phosphohydrolase activity increased 2-fold in the soluble fraction of the liver after one day at 40.8 kPa, but had returned to normal by 7 days. This was accompanied by a significant increase in liver triacylglycerol and sn-glycerol-3-phosphate. The phosphatidate phosphohydrolase activity increased continuously over 7 days in the pair-fed controls, probably due to the restriction on food. Measured as in vivo incorporation of 3H2O into lipids, the hepatic fatty acid synthesis rate increased somewhat in acute hypoxia, but returned to normal values during 7 days of hypoxia. Plasma free fatty acids increased markedly after 24 h in the fasting controls (90%) with a smaller increase in the hypoxic group (50%) due to peripheral lipolysis. Hepatic glycogen stores decreased in the hypoxic and fasting animals both after 1 and 7 days. It is concluded that hypoxia induces the accumulation of fat into the liver at least partly as a consequence of an increase in phosphatidate phosphohydrolase activity in the soluble fraction of the liver.