The present study evaluated the hypothesis that a depression in the hepatic utilization of the fatty acids of liver triglycerides is a major factor in the genesis of the acute ethanol-induced fatty liver. Rats were killed from 2–24 hours after oral intubation of either ethanol, isocaloric glucose, or isotonic saline. The concentration of plasma FFA levels was employed as an index of the oxidation of hepatic fatty acids. Prior to the onset of fatty liver development, plasma FFA and blood ketone levels of ethanol-treated rats were similar to those levels observed in the fasting, saline-control group. During the onset of fatty liver development blood ketone levels of ethanol-treated rats were markedly increased and were associated with an increased fatty acid load presented to the liver. At the peak of fatty liver development blood ketones were markedly depressed in ethanol-gavaged rats. However, this effect was transient and as liver triglyceride levels of the ethanol group returned toward control levels, blood ketone concentrations increased and were comparable to those of the control groups. The data indicate that hepatic fatty acid utilization is unaffected by ethanol administration except for a transient inhibition observed during the peak of the acute ethanol-induced fatty liver.