This study was conducted to identify the nature of a glycogen-associated compound that had been shown to inhibit glucose-6 phosphatase in vitro. Glycogen was purified from the liver of fed rats by potassium hydroxyde digestion and ethanol precipitation. It inhibited glucose-6 phosphatase in microsomes isolated from rats deprived of food for 48 h. Two glycogen-associated fractions were purified by anion-exchange chromatography on DOWEX 1 (200-400 mesh). These fractions inhibited microsomal glucose-6-phosphatase activity in vitro (80 +/- 2 and 76 +/- 3% of control, respectively). After chromatography, glycogen was no longer inhibitory (101 +/- 3% of control). Because glycogen is associated with endoplasmic reticulum membranes in the liver, we tested the hypothesis that lipids could be involved in the inhibitory process. Lipids were extracted from glycogen by Folch's method and analyzed by thin-layer chromatography and gas chromatography. The glycogen-associated fractions did not contain complex lipids but contained unsaturated fatty acids, which had been shown previously to inhibit glucose-6-phosphatase in vitro. Because the concentration of unsaturated fatty acids in both fractions quantitatively accounted for the inhibition of glucose-6 phosphatase observed, and because noninhibitory chromatographed glycogen reconstituted with equivalent amounts of pure unsaturated fatty acids inhibited the enzyme as glycogen did, we conclude that unsaturated fatty acids likely constitute the glycogen-associated compound that inhibits glucose-6 phosphatase activity.