The effect of free fatty acids on the cation-induced fusion of large unilamellar vesicles (liposomes) was investigated by using fluorescent assays which monitor the mixing of aqueous contents of liposomes. Overall fusion was modeled as a two-step process involving aggregation of vesicles followed by actual fusion. Different experimental conditions were used which favored either aggregation or fusion as the rate-limiting step in the overall process. When phosphatidylserine liposomes were induced to fuse by 4 mM Ca2+ plus 5 mM Mg2+, preincubation with arachidonic acid showed a dramatically increased overall rate of fusion compared to the same liposomes not treated with fatty acid. When fusion was induced by 3 mM Ca2+, arachidonic acid had little effect. These results were interpreted in terms of the action of arachidonic acid only at the fusion step per se and not the aggregation step. Therefore, the enhancement of the overall fusion rate would be observed solely under conditions where the actual fusion of liposomes was rate limiting (Ca/Mg) rather than the aggregation of liposomes (Ca alone). When other liposome systems were tested, the effect of arachidonic acid was observed only under fusion rate-limiting conditions. Arachidonic acid was found to act synergistically with promoters of liposomal aggregation, such as Mg2+, spermine, and synexin, to enhance the overall rate of liposome fusion, as would be expected from action at separate kinetic steps. The dependence of the fusion rates on arachidonic acid concentration demonstrated an apparently cooperative effect. The structure of the fatty acid is of critical importance in determining its effects, as shown by the fact that 16-doxylstearic acid always increased the rate of fusion while 5-doxylstearic acid always decreased the rate of fusion under all conditions tested. A number of different fatty acids, including oleic acid, elaidic acid, 16-doxylstearic acid, myristic acid, and stearic acid, were effective at increasing the fusion rate to varying extents. In general, unsaturated fatty acids were more effective than saturated ones, either due to partitioning into the membrane or because of structural requirements for promotion of fusion.