Various studies on the effects of thyroid status on hepatic fatty acid synthesis have produced conflicting results. Several variables (e.g., plasma free fatty acid and glucose concentrations) are altered simultaneously by thyroid status and can affect fatty acid synthesis. To evaluate the effects of these variables, hepatic fatty acid synthesis (lipogenesis) was studied in isolated perfused livers from normal and triiodothyronine-treated rats. Livers were perfused with media containing either 5.5 or 25 mM glucose without fatty acid, or 5.5 mM glucose and 0.7 mM oleate. Rates of lipogenesis were determined by measurement of incorporation of 3H2O into fatty acids. Lipogenesis in livers from hyperthyroid animals exceeded that of controls, when perfused with 5.5 mM glucose with or without oleate. Perfusion with 25 mM glucose increased lipogenesis in both euthyroid and hyperthyroid groups to the same level, abolishing this difference between them. Perfusion with oleate reduced rates of lipogenesis by livers from euthyroid and hyperthyroid rats to a similar extent, but stimulated secretion of radioactive fatty acid in phospholipid and free fatty acid fractions. Oleate increased ketogenesis by livers from normal and triiodothyronine-treated rats, with higher rates of ketogenesis in the triiodothyronine-treated group. When oleate was omitted, ketogenesis in the presence of 5.5 mM glucose by the hyperthyroid group was similar to that of euthyroid controls, while ketogenesis was decreased in the hyperthyroid group relative to controls when perfused with 25 mM glucose. About 30% of the radioactivity incorporated into the total fatty acid of both groups was recovered in palmitate, with the remainder in longer chain saturated and unsaturated fatty acids. In both euthyroid and hyperthyroid groups, the ratio of triacylglycerol:phospholipid fatty acid radioactivity was not only less than predicted (based on synthetic rates of PL and TG) but also was decreased in perfusions with exogenous oleate compared to perfusions without oleate. In perfusions with oleate, both groups incorporated twice as much radioactivity into phospholipid as into triacylglycerol. The data suggest the following concepts: while hepatic fatty acid synthesis and oxidation are increased simultaneously in the hyperthyroid state, de novo synthesized fatty acids seem to be poorer substrates for oxidation than are exogenous fatty acids, and are preferentially incorporated into phospholipid, while exogenous fatty acids are better substrates for oxidation and esterification to triacylglycerol. The preferential utilization of de novo synthesized fatty acid for phospholipid synthesis may be an important physiologic adaptation insuring a constant source of fatty acid for membrane synthesis.