The main goal of the current study was to elucidate the role of mitochondrial arginine metabolism in the regulation of N-acetylglutamate and urea synthesis. We hypothesized that arginine catabolism via mitochondrially bound arginase augments ureagenesis by supplying ornithine for net synthesis of citrulline, glutamate, N-acetylglutamate, and aspartate. [U-(15)N(4)]arginine was used as precursor and isolated mitochondria or liver perfusion as a model system to monitor arginine catabolism and the incorporation of (15)N into various intermediate metabolites of the urea cycle. The results indicate that approximately 8% of total mitochondrial arginase activity is located in the matrix, and 90% is located in the outer membrane. Experiments with isolated mitochondria showed that approximately 60-70% of external [U-(15)N(4)]arginine catabolism was recovered as (15)N-labeled ornithine, glutamate, N-acetylglutamate, citrulline, and aspartate. The production of (15)N-labeled metabolites was time- and dose-dependent. During liver perfusion, urea containing one (U(m+1)) or two (U(m+2)) (15)N was generated from perfusate [U-(15)N(4)]arginine. The output of U(m+2) was between 3 and 8% of total urea, consistent with the percentage of activity of matrix arginase. U(m+1) was formed following mitochondrial production of [(15)N]glutamate from [alpha,delta-(15)N(2)]ornithine and transamination of [(15)N]glutamate to [(15)N]aspartate. The latter is transported to cytosol and incorporated into argininosuccinate. Approximately 70, 75, 7, and 5% of hepatic ornithine, citrulline, N-acetylglutamate, and aspartate, respectively, were derived from perfusate [U-(15)N(4)]arginine. The results substantiate the hypothesis that intramitochondrial arginase, presumably the arginase-II isozyme, may play an important role in the regulation of hepatic ureagenesis by furnishing ornithine for net synthesis of N-acetylglutamate, citrulline, and aspartate.