The characteristics of inhibition of carnitine palmitoyltransferase (CPT) I by malonyl-CoA were studied for the enzyme in mitochondria isolated from sheep liver, a tissue with a very low rate of fatty acid synthesis. Malonyl-CoA was as potent in inhibiting the sheep liver enzyme as in inhibiting the enzyme in rat liver mitochondria. CPT I in guinea-pig liver mitochondria was also similarly inhibited. The inhibition showed the same time-dependent characteristics previously established for the rat liver enzyme. Methylmalonyl-CoA was as effective an inhibitor of CPT I as malonyl-CoA in sheep liver mitochondria, but did not affect CPT I activity in mitochondria from rat or guinea-pig liver. The concentrations of malonyl-CoA required to inhibit CPT I in sheep liver mitochondria in vitro were similar to those found in freeze-clamped sheep liver samples (about 7 nmol of malonyl-CoA/g wet wt.). In sheep liver cells the content of malonyl-CoA was only one-tenth of that observed in vivo when glucose only was added to the incubation medium. Inclusion of acetate and/or insulin increased the malonyl-CoA content about 10-fold, to values similar to those observed in vivo. The rate of fatty acid synthesis in sheep liver cells was about 1% of that observed in rat liver, but was correlated with the concentrations of malonyl-CoA in the cells under various incubation conditions. These observations are discussed in relation to (i) the regulatory role of malonyl-CoA in tissues that have a low capacity for fatty acid synthesis, and (ii) the utilization by sheep liver of propionate as a gluconeogenic precursor.