When bile was diverted from the intestine of four sheep for 12-48 hr, they secreted 0-31±0-019 ml. bile/min. This contained 5 0+0 55 ,tEq total fatty acids, principally in phosphatidylcholine (48±1.9%) and lysophosphatidylcholine (31±5-0%). The output of total fatty acids increased when taurocholate was infused into the portal vein or duodenum, and this was due to an increased secretion of phosphatidylcholine. Stimulation of total fatty acid secretion by bile salts was most marked at low rates of bile salt transfer, and reached a maximum when taurocholate was infused into the portal vein at 37 ,uM/min or more. The mean maximum output of total fatty acids in the bile of 12 sheep was 15-2±1-41 ,tM/min. When 14C-palmitic acid was infused into the portal vein with the taurocholate, it appeared in biliary phospholipids, and by the sixth hour of the infusion the level of radioactivity in bile was 8.3% of the rate of infusion. When taurocholate was infused into the portal vein at 45 pLM/min or less it was transferred quantitatively into bile, but the efficiency of transfer decreased at higher infusion rates. Secretion of bile salts into bile was accompanied by increased secretion of water, but the volume of water accompanying each micromole of bile salt decreased with increases in the rate of secretion. The bile flow did not increase further when more than 127 tM/min taurocholate was infused into the portal vein, and in four sheep the maximum rate was 1F06 ±0-052 ml./min. It is suggested that availability of bile salt may limit secretion of phospholipid into bile when the rate of secretion of bile salt is low, but that when large amounts of bile salt are secreted into bile some other factor, possibly the rate of phospholipid synthesis, limits the secretion of phospholipids into bile.