Hepatic mitochondrial functions related to fatty acid metabolism, including the respiratory control ratio, fatty acid oxidative capacity and carnitine palmitoyltransferase I activity, were studied in vitro with mitochondria isolated from rats treated with thioacetamide for up to 12 wk. The levels of ketone bodies, carnitine, carnitine esters and malonyl–coenzyme A were also determined in liver extracts. Polarography of mitochondrial respiration from succinate or glutamate plus malate showed a lower respiratory control ratio in thioacetamide-treated rats, whereas uncoupled oxygen consumption was not altered. This suggests that the mitochondrial respiratory chain capacity remained intact in the thioacetamide-treated rats. The oxygen consumption associated with palmitoyl–coenzyme A and palmitoyl-L-carnitine oxidation by isolated liver mitochondria was increased by thioacetamide treatment on both a per–mitochondrial protein and a per–total liver basis. The carnitine palmitoyl-transferase I activity; the tissue levels of ketone bodies, carnitine and carnitine esters; and the β-hydroxybutyrate/acetoacetate ratio were all higher in the livers of thioacetamide-treated animals than in control livers, whereas the hepatic malonyl–coenzyme A level was decreased by thioacetamide. These results indicate the increased diversion of cytosolic longchain acyl-coenzyme As into the mitochondria for β-oxidation rather than their esterification and use in lipogenesis. These intrahepatic metabolic changes induced by chronic thioacetamide administration may reflect the whole-body catabolic state and can be seen as adaptive for maintaining energy homeostasis under conditions of impaired glucose tolerance. (HEPATOLOGY 1992;15:1099–1106).