Fatty acid synthase, purified from lactating bovine mammary gland, utilizes coenzyme A esters of acetoacetic, 3-hydroxybutyric, and crotonic acids as substrates for its partial reactions at micromolar concentrations. The NADPH:acetoacetyl-CoA reductase had a Km of 5 microM acetoacetyl-CoA and a Vmax of about 4 mumol of NADPH oxidized min-1 mg-1. In contrast, the Km for the model compound, acetoacetyl pantetheine was 820 microM and that of S-acetoacetyl-N-acetylcysteamine was over 40 mM. The reduction of acetoacetyl-CoA was observed with the enzyme from rat tissues also but not with those from avian tissues or yeast. With the bovine mammary enzyme, the reaction was found to oxidize 2 mol of NADPH for every mol of acetoacetyl-CoA consumed. Butyrate was the major product of reduction. The reductase activity was susceptible to inhibition by several sulfhydryl reagents; it was lost when the synthase was dissociated into one-half molecular weight subunits or when the incubation mixture was depleted of CoA. It was competitively inhibited by acetyl-CoA, butyryl-CoA, methylmalonyl-CoA, and 2-methylcrotonyl-CoA. These results as well as its use as a primer in fatty acid synthesis by the enzyme suggest that the acetoacetyl group from acetoacetyl-CoA is transferred to the enzyme, presumably to its 4'-phosphopantheine prosthetic group. The acyl group is then expected to remain attached to the enzyme while it is reduced, dehydrated, and reduced again to form a butyryl group which can either undergo chain elongation, if malonyl-CoA is present, or be released from the enzyme by hydrolysis or transfer to free CoA.