The development of fatty acid metabolism was studied in isolated hepatocytes from newborn rats. Ketone-body production from oleate is increased 6-fold between 0 and 16 h after birth. This increase is related to an enhanced beta-oxidation rather than to a channeling of acetyl-CoA from the tricarboxylic acid cycle to ketone-body synthesis. The increase in oleate oxidation is not related to a decreased esterification rate, as the latter is already low at birth and does not decrease further. At birth, lipogenic rate is 2-3-fold lower than in fed adult rats and it decreases to undetectable values in 16 h-old rats. A 90% inhibition of lipogenesis in hepatocytes of newborn rats (0 h) by glucagon and 5-(tetradecyloxy)-2-furoic acid does not lead to an increased oxidation of non-esterified fatty acids. This suggests that the inverse relationship between lipogenesis and ketogenesis in the starved newborn rat is not responsible for the switch-on of fatty acid oxidation at birth. Moreover, ketogenesis from octanoate, a medium-chain fatty acid the oxidation of which is independent of carnitine acyltransferase, follows the same developmental pattern at birth as that from oleate.