1. The present study demonstrates that lactate and acetate stimulate fatty acid synthesis and inhibit cholesterogenesis by isolated rat hepatocytes. 2. Exposure of the intact cells to lactate increases the activity of acetyl-CoA carboxylase, as can be measured in homogenates of these cells. A similar effect by acetate was not observed. 3. Both acetate and lactate drastically increase the cellular level of citrate. 4. Possible mechanisms underlying the difference in response of fatty acid and cholesterol synthesis to an increase in substrate availability are discussed. Futhermore, a mechanism is proposed for the lactate effect on acetyl-CoA carboxylase.