We recently showed that a hypocaloric carbohydrate restricted diet (CRD) had two striking effects: (1) a reduction in plasma saturated fatty acids (SFA) despite higher intake than a low fat diet, and (2) a decrease in inflammation despite a significant increase in arachidonic acid (ARA). Here we extend these findings in 8 weight stable men who were fed two 6-week CRD (12%en carbohydrate) varying in quality of fat. One CRD emphasized SFA (CRD-SFA, 86 g/d SFA) and the other, unsaturated fat (CRD-UFA, 47 g SFA/d). All foods were provided to subjects. Both CRD decreased serum triacylglycerol (TAG) and insulin, and increased LDL-C particle size. The CRD-UFA significantly decreased plasma TAG SFA (27.48 ± 2.89 mol%) compared to baseline (31.06 ± 4.26 mol%). Plasma TAG SFA, however, remained unchanged in the CRD-SFA (33.14 ± 3.49 mol%) despite a doubling in SFA intake. Both CRD significantly reduced plasma palmitoleic acid (16:1n-7) indicating decreased de novo lipogenesis. CRD-SFA significantly increased plasma phospholipid ARA content, while CRD-UFA significantly increased EPA and DHA. Urine 8-iso PGF(2α), a free radical-catalyzed product of ARA, was significantly lower than baseline following CRD-UFA (-32%). There was a significant inverse correlation between changes in urine 8-iso PGF(2α) and PL ARA on both CRD (r = -0.82 CRD-SFA; r = -0.62 CRD-UFA). These findings are consistent with the concept that dietary saturated fat is efficiently metabolized in the presence of low carbohydrate, and that a CRD results in better preservation of plasma ARA.