Ketone body production and oxidation of 14C fatty acids to CO2 were measured in hepatocytes isolated from lean and obese Zucker rats. The oxidation of [1-14C]octanoate, [1-14C]palmitate and [1-14C]palmitoyl carnitine to 14CO2 was 50%--70% less in obese than in lean rats. Although ketone body production in hepatocytes from both lean and obese rats was increased by fasting, there was a significantly lower rate of ketone body production in hepatocytes from obese rats. Ketone body production was reduced to a comparable extent by increasing the glucose concentration in the incubation media of hepatocytes from both lean and obese rats. Glucagon and carnitine increased ketogenesis and the effect were additive and similar in lean and obese rats. These data suggest that beta-oxidation and ketogenesis are suppressed in the obese Zucker rat, and further that ketone bodies can be modulated similarly in hepatocytes from lean and obese rats by nutritional and hormonal intervention. It is postulated that the decreased beta-oxidation and ketone body production may play a role in the development or maintenance of obesity in the Zucker rat.