Rats were fed ethanol and a fat-free diet for 30 days to determine whether dietary fat is needed for the development of fatty liver. The severity of fatty liver was similar to that of rats fed an isocaloric diet with 35% fat. Small amounts (29 mg/day) of dietary arachidonic acid prevented alcoholic fatty liver. Rats fed either the alcohol (AF) or control (CF) fat-free diets developed essential fatty acid deficiency (EFAD) as measured by the triene/tetraene ratio of liver and plasma lipids. Rats fed arachidonic acid (AA, alcohol and CA, control diets) did not develop EFAD. Although EFAD alone did not cause the development of fatty liver, the combination of dietary ethanol and EFAD did. The ratios of 16:1/16:0 and 18:1/18:0 in liver lipids indicated that desaturase enzymes were less active and lipogenesis was reduced in rats fed the AA diet compared to those fed the AF diet. In contrast, stimulated lipogenesis appears to have been the cause of fatty liver in rats fed the AF diet.