Abstract The structural and metabolic integrity of isolated rat liver cells was verified by the high percentage of trypan blue exclusion, a low degree of lactate dehydrogenase release into the medium, a constant rate of gluconeogenesis from l(+)-lactate, and increased oxygen consumption following the addition of 2,4-dinitrophenol. Palmitic acid, incubated in an albumin-bound form with isolated liver cells, was esterified to form phospholipids, triglycerides, diglycerides, and cholesterol esters and was oxidized to CO2 and ketone bodies. In liver cells from fed rats, the major portion of palmitate was esterified, an intermediate quantity was oxidized to ketone bodies, and a smaller amount was oxidized to CO2. The partition of palmitic acid between esterification and ketogenesis was inversed by fasting, whereas oxidation to CO2 and the total rate of palmitate utilization were unaltered. Greater esterification of [14C]palmitate in cells from fed rats was not a result of carbon recycling via chain elongation or de novo synthesis. Liver cells from fasted rats derived more energy from fatty acid oxidation than cells from fed rats. The results indicate that citric acid cycle flux and endogenous lipolysis were unaffected by fasting. These observations signify that altered partition of free fatty acids between the pathways of oxidation and esterification in the liver is a major causative factor in the increased ketogenesis in the fasting state. An increase in [1-14C]palmitate concentration augmented palmitate uptake, ketogenesis, and esterification, whereas 14CO2 production was only slightly affected. The estimated citric acid cycle flux and the acetoacetate to β-hydroxybutyrate ratio were diminished. Increased ketogenesis in response to sequential elevation of the palmitate concentration could not be accounted for by diminished citric acid cycle flux and therefore resulted from increased β oxidation. Ketone body specific activity approached a constant value at v of 3 to 4. Results indicate intracellular mixing of free fatty acids derived from endogenous lipolysis and from the medium, prior to β oxidation. Phospholipid was the predominant esterification product at low concentrations of added palmitate, but, as phospholipid formation approached saturation, a sigmoid increase in diglyceride and triglyceride formation occurred. Fructose and glycerol each decreased ketogenesis from added palmitate. Fructose, glycerol, and, to a lesser extent, glucose increased palmitate esterification in liver cells isolated from fasting rats. This effect was characterized by increased conversion of added palmitate to diglycerides, triglycerides, and phospholipids and decreased conversion to cholesterol esters. These substrates did not alter the rate of fatty acid uptake. Fructose, glycerol, and, to a lesser extent, glucose elevated 14CO2 production from [1-14C]palmitate. At higher fructose concentrations the elevated 14CO2 production was reversed. Results suggest that substrates which enter glycolysis beyond fructose 1,6-diphosphate decrease ketogenesis by competition with fatty acid oxidation and enhance esterification by the resulting increased availability of long chain free fatty acids and by a separate preferential stimulation of glycerolipid formation. Results indicate that decreased availability of non-fatty acid substrates and, thereby, decreased competitive oxidation of these substrates is a participating causative factor in the increased oxidation, and the decreased esterification, of long chain fatty acids in the liver in the fasting state.