The effects of ethanol on fatty acid synthesis, esterification and oxidation were studied in hepatocytes isolated from fed and 24 hr fasted rats. 2. [3H]H2O was preferentially incorporated into the glycerol backbone of triglycerides and phospholipids. Addition of ethanol markedly increased the incorporation of this label in both classes of glycerolipids; the increase was higher in fasted rat hepatocytes, both in the glycerol backbone and acyl groups of glycerolipids. 3. Ethanol increased [U-14C]palmitate incorporation into triglycerides only in hepatocytes from fasted rats. 4. [14C]CO2 and total acid soluble product formation from [1-14C]palmitate resulted inhibited by ethanol both in the fed and the fasted state.