Acetoacetyl-CoA thiolase and 3-hydroxy-3-methylglutaryl coenzyme synthase which comprise the 3-hydroxy-3-methylglutaryl-CoA-generating system(s) for hepatic cholesterogenesis and ketogenesis exhibit dual mitochondrial and cytoplasmic localization. Twenty to forty per cent of the thiolase and synthase of avian and rat liver are localized in the cytoplasmic compartment, the remainder residing in the mitochondria. In contrast, 3-hydroxy-3 methylglutaryl-CoA lyase, an enzyme unique to the "3-hydroxy-3-methylglutaryl-CoA cycle" of ketogenesis, appears to be localized in the mitochondrion. The small proportion, 4 to 8 percent, of this enzyme found in the cytoplasmic fraction appears to arise via leakage from the mitochondria during cell fractionation in that its properties, pI and stability, are identical to those of the mitochondrial lyase. These results are consistent with the view that ketogenesis which involves all three enzymes, acetoacetyl-CoA thiolase, 3-hydroxy-3-methylglutaryl-CoA synthase and 3-hydroxy-3-methylglutaryl-CoA lyase, occurs exclusively in the mitochondrion, whereas cholesterogenesis, a pathway which involves only the 3-hydroxy-3-methylglutaryl-CoA synthesizing enzymes, is restricted to the cytoplasm. Further fractionation of isolated mitochondria from chicken and rat liver showed that all three of the 3-hydroxy-3-methylglutaryl-CoA cycle enzymes are soluble and are localized within the matrix compartment of the mitochondrion. Likewise, cytoplasmic acetoacetyl-CoA thiolase and 3-hydroxy-3-methylglutaryl-CoA synthase are soluble cytosolic enzymes, no thiolase or synthase activity being detectable in the microsomal fraction. Chicken liver mitochondrial 3-hydroxy-3methylglutaryl-CoA synthase activity consists of a single enzymic species with a pI of 7.2, whereas the cytoplasmic activity is composed of at least two species with pI values of 4.8 and 6.7. Thus it is evident that the mitochondrial and cytoplasmic species are molecularly distinct as has been shown to be the case for the mitochondrial and cytoplasmic acetoacetyl-CoA thiolases from avian liver (Clinkenbeard, K. D., Sugiyama, T., Moss, J., Reed, W. D., and Lane, M. D. (1973) J. Biol. Chem. 248, 2275). Substantial mitochondrial 3-hydroxy-3-methylglutaryl-CoA lyase activity is present in all tissues surveyed, while only liver and kidney possess significant mitochondrial 3-hydroxy-3-methylglutaryl-CoA synthase activity. Therefore, it is proposed that tissues other than liver and kidney are unable to generate acetoacetate because they lack the mitochondrial synthase.