Ketone bodies accumulate in the plasma in conditions of fasting and uncontrolled diabetes. The initiating event is a change in the molar ratio of glucagon:insulin. Insulin deficiency triggers the lipolytic process in adipose tissue with the result that free fatty acids pass into the plasma for uptake by liver and other tissues. Glucagon appears to be the primary hormone involved in the induction of fatty acid oxidation and ketogenesis in the liver. It acts by acutely dropping hepatic malonyl-CoA concentrations as a consequence of inhibitory effects exerted in the glycolytic pathway and on acetyl-CoA carboxylase (EC 6.4.1.2). The fall in malonyl-CoA concentration activates carnitine acyltransferase I (EC 2.3.1.21) such that long-chain fatty acids can be transported through the inner mitochondrial membrane to the enzymes of fatty acid oxidation and ketogenesis. The latter are high-capacity systems assuring that fatty acids entering the mitochondria are rapidly oxidized to ketone bodies. Thus, the rate-controlling step for ketogenesis is carnitine acyltransferase I. Administration of food after a fast, or of insulin to the diabetic subject, reduces plasma free fatty acid concentrations, increases the liver concentration of malonyl-CoA, inhibits carnitine acyltransferase I and reverses the ketogenic process.