Malonyl-CoA binding and malonyl-CoA inhibition of carnitine palmitoyltransferase-I (CPT-I) were measured in hepatic mitochondria from normal and diabetic rats and in protease-treated mitochondria from fed rats to test the hypothesis that proteolysis represents a mechanism by which diabetes produces changes in the sensitivity of CPT-I to inhibition by malonyl-CoA. As in diabetes, protease treatment increased the apparent Ki values for malonyl-CoA. Palmitoyl-CoA greatly diminished malonyl-CoA specific binding in the mitochondrial system being studied, suggesting strong competition at the malonyl-CoA binding site. Proteolysis decreased capacity for specific binding of malonyl-CoA by 60-80%, but it had no effect on binding affinity. In contrast, the decreased specific binding of malonyl-CoA seen in the diabetic state is accompanied by increased binding affinity. Furthermore, observed Kd values differed from Ki values by a factor of 10 or more, suggesting that measured Kd and Ki may represent different ligand-protein complexes. These data suggest that alterations in inhibition of CPT-I by malonyl-CoA occurring in the diabetic state may involve mechanisms other than simple proteolytic removal of malonyl-CoA binding sites.