NADPH-dependent lipid peroxidation in liver microsomes, as measured by malondialdehyde formation, decreased by 90% when rats were fed a diet containing 16% coconut oil. This reduction occurred within 1 to 3 days after the rats were placed on this highly saturated diet. The decrease in peroxidation activity was associated with a reduction in the polyunsaturated fatty acid content of the microsomal phospholipids, particularly arachidonic acid. When the rats were transferred to a highly polyunsaturated diet containing 16% sunflower seed oil, microsomal lipid peroxidation and arachidonic acid content were restored to normal values within 10 days. Arachidonic acid contained in the microsomal choline and ethanolamine phosphoglycerides was the main substrate for peroxidation. Addition of diarachidonyl phosphatidylcholine, but not free arachidonic acid, to the assay system restored peroxidation activity in tahe micraosomes prepared from ahe livers of the rats fed saturated fat. Likewise, prior incubation of these microsomes with a mixture of phospholipid exchange protein and liposomes containing diarachidonyl phosphatidylcholine restored peroxidation activity. These results indicate that diets rich in saturated fat reduce microsomal lipid peroxidation by decreasing the availability of polyunsaturated fatty acids in substrate phospholipids.