Recent evidence suggests that lipoproteins serve as circulating reservoirs of peroxisomal proliferator activated receptor (PPAR) ligands that are accessible through lipolysis. The present study was conducted to determine the biochemical basis of PPAR-alpha activation by lipolysis products and their contribution to PPAR-alpha function in vivo. PPAR-alpha activation was measured in bovine aortic endothelial cells following treatment with human plasma, VLDL lipolysis products, or oleic acid. While plasma failed to activate PPAR-alpha, oleic acid performed similarly to VLDL lipolysis products. Therefore, fatty acids are likely to be the PPAR-alpha ligands generated by VLDL lipolysis. Indeed, unbound fatty acid concentration determined PPAR-alpha activation regardless of fatty acid source, with PPAR-alpha activation occurring only at unbound fatty acid concentrations that are unachievable under physiological conditions without lipase action. In mice, a synthetic lipase inhibitor (poloxamer-407) attenuated fasting-induced changes in expression of PPAR-alpha target genes. Apolipoprotein CIII (apoCIII), an endogenous inhibitor of lipoprotein and hepatic lipase, regulated access to the lipoprotein pool of PPAR-alpha ligands, because addition of exogenous apoCIII inhibited, and removal of endogenous apoCIII potentiated, lipolytic PPAR-alpha activation. These data suggest that the PPAR-alpha response is generated by unbound fatty acids released locally by lipase activity and not by circulating plasma fatty acids.