Isolated ovine adipocytes, unlike rat adipose tissue, could utilize lactate at a high rate. 2. When the rate of fatty acid synthesis was attenuated with 5-(tetradecyloxy)-2-furoic acid, a fatty acid synthesis inhibitor, there was a good positive correlation between the rates of lactate oxidation to CO2 and lactate incorporation into fatty acids. 3. Addition of 2,4-dinitrophenol enhanced lactate oxidation to CO2 independent of fatty acid synthesis. Under this condition, estimated cytosolic NADH formation from lactate dehydrogenation exceeded the need of NADH for cytosolic oxaloacetate reduction and for glyceride glycerol formation. 4. Mitochondria isolated from ovine adipocytes oxidized added NADH rapidly in a reconstituted alpha-glycerophosphate shuttle system. 5. It is possible that the ability of ovine adipocytes to utilize lactate may be related to the active alpha-glycerophosphate shuttle for cytosolic NADH reoxidation.