CPT (carnitine palmitoyltransferase) 1 and CPT2 regulate fatty acid oxidation. Recombinant rat CPT2 was isolated from the soluble fractions of bacterial extracts and expressed in Escherichia coli. The acyl-CoA chain-length-specificity of the recombinant CPT2 was identical with that of the purified enzyme from rat liver mitochondrial inner membranes. The Km for carnitine for both the mitochondrial preparation and the recombinant enzyme was identical. In isolated mitochondrial outer membranes, cardiolipin (diphosphatidylglycerol) increased CPT1 activity 4-fold and the Km for carnitine 6-fold. It decreased the Ki for malonyl-CoA inhibition 60-fold, but had no effect on the apparent Km for myristoyl-CoA. Cardiolipin also activated recombinant CPT2 almost 4-fold, whereas phosphatidylglycerol, phosphatidylserine and phosphatidylcholine activated the enzyme 3-, 2- and 2-fold respectively. Most of the recombinant CPT2 was found to have substantial interaction with cardiolipin. A model is proposed whereby cardiolipin may hold the fatty-acid-oxidizing enzymes in the active functional conformation between the mitochondrial inner and outer membranes in conjunction with the translocase and the acyl-CoA synthetase, thus combining all four enzymes into a functional unit.