Extracellular fatty acids entering the hepatocyte are either esterified to cytosolic TAG or oxidized to ketone bodies. Very little is esterified and secreted directly in association with VLDL. Thus, even when extracellular fatty acids are available, the major, direct source of VLDL TAG is the cytosolic pool. The recruitment of cytosolic TAG for VLDL assembly involves lipolysis followed by re-esterification. At least 70% of the secreted TAG is derived via this route. Fatty acids released at this lipolytic step are utilized exclusively for VLDL TAG synthesis and are not available for ketogenesis. Substantially more cytosolic TAG undergoes lipolysis than is required to meet the needs of VLDL assembly. The remaining fatty acids are re-esterified and re-cycled to the cell cytosol. From a physiological viewpoint, the presence of this indirect route for VLDL TAG recruitment would provide a means of regulation of VLDL secretion which is independent of the plasma fatty acid concentration. In this respect, several pathophysiological conditions are known in which there is a negative association between plasma fatty acid concentration and the rate of VLDL secretion. These are: (a) insulin-dependent diabetes, (b) starvation, (c) fat-feeding. Lipolysis of cytosolic TAG and transfer of fatty acids into the ER lumen may provide a regulatory focus for the control of hepatic VLDL output.