The physiological function of the mitochondrial uncoupling protein (UCP), UCP3, is still under debate. There is, however, ample evidence to indicate that, in contrast to UCP1, the primary function of UCP3 is not the dissipation of energy. Rather, several lines of evidence suggest that UCP3 is associated with cellular fatty acid metabolism. The highest levels of expression of UCP3 have been found in type 2 glycolytic muscle fibres, and fasting and high-fat diets up regulate UCP3. This up-regulation is most pronounced in muscle with a low fat oxidative capacity. Acute exercise also up regulates UCP3, and this effect has been shown to be a result of the exercise-induced increase in plasma fatty acid levels. In contrast, regular physical activity, which increases fat oxidative capacity, reduces UCP3 content. Based on these data it has been postulated that UCP3 functions to export those fatty acids that cannot be oxidized from the mitochondrial matrix, in order to prevent fatty acid accumulation inside the matrix. Several experiments have been conducted to test this hypothesis. Blocking carnitine palmitoyltransferase 1, thereby reducing fat oxidative capacity, rapidly induces UCP3. High-fat diets, which increase the mitochondrial supply of fatty acids, also up regulate UCP. However, feeding a similar amount of medium-chain fatty acids, which can be oxidized inside the mitochondrial matrix and therefore does not need to be exported from the matrix, does not affect UCP3 protein levels. In addition, UCP3 is increased in patients with defective beta-oxidation and is reduced after restoring oxidative capacity. In conclusion, it is suggested that UCP3 has an important physiological function in facilitating outward transport from the mitochondrial matrix of fatty acid anions that cannot be oxidized, thereby protecting against lipid-induced mitochondrial damage.