Studied on the oxidation of oleic and octanoic acids to ketone bodies were carried out in homogenates and in mitochondrial fractions of livers taken from fed and fasted rats. Malonyl-CoA inhibited ketogenesis from the former but not from the latter substrate. The site of inhibition appeared to be the carnitine acyltransferase I reaction. The effect was specific and easily reversible. Inhibitory concentrations were in the range of values obtained in livers from fed rats by others. It is proposed that malonyl-CoA functions as both precursor for fatty acid synthesis and suppressor of fatty acid oxidation. As such, it might be an important element in the carbohydrate-induced sparing of fatty acid oxidation.