Livers from normal fed male rats were perfused in a recycling system in vitro. Glucagon was infused in varying quantities to give final concentration in the cell-free perfusate of 4.9 · 10 −10−4.9 · 10 −7 M after 3 h of perfusion, assuming no degradation of the hormone. Where indicated, cyclic somatostatin was infused simultaneously to give a final concentration of 3.0 · 10 −6 M. In the absence of somatostatin, glucagon at a concentration as low as 4.9 · 10 −10 M increased the release of glucose and increased ketogenesis, but impaired the synthesis and release of perfusate triacylglycerol and very low density lipoprotein lipids. Somatostatin did not affect these actions of glucagon. Somatostatin alone, however, did reduce the output of very low density lipoprotein. It is suggested that the alteration of fatty acid metabolism by somatostatin in vivo results from modulation of pancreatic glucagon secretion, not from interference by somatostatin of the action of glucagon on the liver.