In the current study, we have determined the cDNA and the genomic sequences of the arylacetamide deacetylase (AADA) gene in mice and rats. The AADA genes in the rat and mouse consist of five exons and have 2.4 kilobases of homologous promoter sequence upstream of the initiating ATG codon. AADA mRNA is expressed in hepatocytes, intestinal mucosal cells (probably enterocytes), the pancreas and also the adrenal gland. In mice, there is a diurnal rhythm in hepatic AADA mRNA concentration, with a maximum 10 h into the light (post-absorptive) phase. This diurnal regulation is attenuated in peroxisome proliferator-activated receptor ␣ knockout mice. Intestinal but not hepatic AADA mRNA was increased following oral administration of the fibrate, Wy-14,643. The homology of AADA with hormone-sensitive lipase and the tissue distribution of AADA are consistent with the view that AADA plays a role in promoting the mobilization of lipids from intracellular stores and in the liver for assembling VLDL. This hypothesis is supported by parallel changes in AADA gene expression in animals with insulin-deficient diabetes and following treatment with orotic acid.