The influence of free fatty acids (FFA's) on the albumin binding of bilirubin was studied in vitro in the plasma of infants with neonatal hyperbilirubineamia and in solutions employing crystalline albumin to which bilirubin and FFA (oleic acid) were added. The bilirubin saturation index (SI) was utilized to distinguish between that fraction of bilirubin bound at the primary (high-affinity) site of albumin and bilirubin bound at secondary sites from which it is easily dissociated by salicylate. The relative saturation of albumin with bilirubin was also measured by addition of salicylate to whole blood samples where bilirubin was also measured by addition of salicylate to whole blood samples where bilirubin dissociated from the albumin could be sequestered by the red cells. The present studies indicate that FFA's influence the binding of bilirubin in two ways. At molar ratios of FFA to albumin (2:1 to 4:1), the FFA's compete with bilirubin for binding at the high-affinity site so that a significant portion of the bilirubin is transported at secondary sites, making it susceptible to displacement by water-soluble organic anions. At high molar ratios (greater than 5:1) FFA's compete with bilirubin for albumin binding at the secondary sites as well. In contrast to crystalline albumin where the first two molar equivalents of FFA do not influence the binding of bilirubin to albumin, all FFA concentrations in hyperbilirubinemic plasma reduce the affinity of albumin for bilirubin at its high-affinity site even though there is a molar excess of albumin over bilirubin.