D-beta-Hydroxybutyrate dehydrogenase of beef heart mitochondria is a lipid-requiring enzyme, bound to the inner membrane. The orientation of this enzyme in the membrane has been studied by comparing the characteristics of the enzyme in mitochondria and 'inside-out' submitochondrial vesicles. We observe that the enzymic activity is (1) latent in intact mitochondria; (2) relatively stable to trypsin digestion in mitochondria but rapidly inactivated in submitochondrial vesicles by this treatment; and (3) released more rapidly from submitochondrial vesicles by phospholipase A2 digestion than from mitochondria. Conclusive evidence that D-beta-hydroxybutyrate dehydrogenase is localized on the matrix face of the mitochondrial inner membrane is provided by the correlation that the enzyme is released from submitochondrial vesicles before the membrane becomes leaky to cytochrome c. The arrangement of D-beta-hydroxybutyrate dehydrogenase in the membrane is discussed within a generalized classification of the orientation of proteins in membranes. The evidence indicates that D-beta-hydroxybutyrate dehydrogenase is an amphipathic molecule and as such is inlaid in the membrane, i.e. the enzyme is partially inserted into the hydrophobic milieu of the membrane, with the polar, functional end extending into the aqueous milieu.