A relationship between increased lipid concentration in the liver and reduced hepatic function has been suggested; however, there is little direct evidence of change in specific hepatic functions. Hepatocytes were obtained from ruminating calves and were incubated as monolayers for 36 h. The media contained a mixture of nonesterified fatty acids (NEFA) at 0, 0.5, 1.0, and 1.5 mM NEFA with molar proportions of 0.435 oleate, 0.319 palmitate, 0.144 stearate, 0.049 linoleate, and 0.053 palmitoleate. Ureagenesis or gluconeogenesis was measured from 48 to 51 h after plating using hepatocytes that had only previous (12 to 48 h), only concurrent (48 to 51 h), or previous and concurrent (12 to 51 h) exposure to NEFA. A previous 36-h exposure to NEFA caused cell triglyceride accumulation, yielding triglyceride concentrations that corresponded with liver that is clinically described as normal to moderately fatty. Previous, prolonged exposure to NEFA reduced ureagenesis and increased gluconeogenesis. Concurrent exposure to NEFA did not significantly affect gluconeogenesis or ureagenesis and did not alter the residual effect of prolonged incubation with NEFA. Reduced ureagenesis was related to increased cell triglyceride accumulation independently of other direct NEFA effects. Decreased ureagenic capacity may play a role in the morbidity associated with periparturient fatty liver in dairy cows.