Palmitate oxidation by liver mitochondria from fed and starved rats exhibited markedly different sensitivities to inhibition by malonyl-CoA. In the mitochondrial system from fed rats, 50% inhibition required l9,uM-malonyl-CoA, whereas the mitochondria from starved rats were by comparison refractory to malonyl-CoA. Inhibition by malonylCoA was completely reversed by increasing the molar ratio of fatty acid to albumin. Results indicate that the potential effectiveness of malonyl-CoA as an inhibitor of fatty acid oxidation in the liver is dependent on an unidentified regulatory component of the system. The functional activity of this component is modified by the nutritional state, and its site of action is at the mitochondrial level.