The stimulatory effect of starvation on omega oxidation of stearate by the 20,000 X g supernatant fluid of rat liver homogenates was studied. The effect was obtained after starvation for 24 hours. Starvation for longer times did not further increase omega oxidation. The stimulatory effect of starvation on omega oxidation of stearic acid was accompanied by a reduced incorporation of stearic acid into phosphatidic acid, diglycerides, and triglycerides. Substitution of the 100,000 X g supernatant fluid from liver homogenate of starved rats with 100,000 X g supernatant fluid from liver homogenates of control rats reduced the microsomal omega oxidation of stearic acid with a simultaneous increase in incorporation of stearic acid into the different glycerides. Under the latter conditions almost no free stearic acid could be isolated from the incubation mixture after the incubation. Of three different soluble factors necessary for glyceride formation, ATP appeared to be the most important from a regulatory point of view. Thus the soluble fraction of liver homogenate from a starved rat was shown to contain suboptimal concentrations of ATP. Addition of physiological amounts of ATP to the 20,000 X g supernatant fluid of homogenate of liver of starved rats had the same effect as addition of 100, 000 X g supernatant fluid from liver homogenate of control rats, i.e. decrease in omega oxidation and increase in formation of glycerides. Addition of sn-glycerol 3-phosphate and CoA-SH in amounts optimal for glyceride formation to the 20,000 X g supernatant fluid of liver homogenate of starved rats had only small effects on omega oxidation and glyceride formation. The results are consistent with a competition for free fatty acids between the acyl-CoA synthetases involved in biosynthesis of glycerides and the microsomal hydroxylase(s) involved in omega oxidation of fatty acids. The concentration of ATP in the soluble fraction is of importance in this competition. The possibility is discussed that this competition is of importance also under in vivo conditions and that a decreased rate of esterification in the starved state is responsible for the higher excretion of omega-oxidized fatty acids in urine in the ketotic state.