We have measured rates of ketogenesis and malonyl-CoA contents of hepatocytes isolated from meal-fed rats under a variety of incubation conditions in order to determine the relationship between the intracellular malonyl-CoA level and the rate of ketogenesis. Evidence obtained from rat liver homogenates suggested that malonyl-CoA, which is a major determinant of fatty acid synthesis in vivo, also inhibits carnitine acyltransferase I (EC 2.3.1.21) and thereby decreases the rate of ketogenesis (McGarry, J.D., Mannaerts, G.P., and Foster, D.W. (1977) J. Clin. Invest. 60, 265-270). In hepatocytes from meal-fed rats, malonyl-CoA could be increased by glucose or lactate plus pyruvate and decreased by glucagon, oleic acid and the fatty acid synthesis inhibitor 5-(tetradecyloxy)-2-furoic acid. Malonyl-CoA varied from 14.8 +/- 1.2 to 1.4 +/- 0.1 nmol/g wet weight of cells. Rates of ketone body production varied from 0.10 +/- 0.01 to 0.96 +/- 0.06 mumol/min/g wet weight of cells and varied inversely with the malonyl-CoA content. Dixon plots and Cornish-Bowden plots of data suggest that malonyl-CoA is a competitive inhibitor of ketogenesis with a Ki of 2 nmol/g wet weight of cells. We conclude that in hepatocytes from meal-fed rats the cellular content of malonyl-CoA and the concentration of long chain fatty acid available to the cells are major determinants of the rate of ketogenesis.