Fatty liver was induced in six sheep by fasting and treatment with phloridzin and epinephrine. Treatment was associated with a rise in the concentration in serum and hepatic uptake of nonesterified fatty acid (NEFA) compared with pretreatment (P less than .01). At 24 h after the start of the treatment, concentrations of serum lipoprotein in each density class were not different from baseline, but all were elevated (P less than .01) by 120 h of treatment. Hepatic triacylglycerol (TG) concentration increased (P less than .01) 17-fold within the first 48 h of treatment, with no additional increase during the remaining 72 h. The activity of phosphatidate phosphohydrolase (PAP) in hepatic microsomes increased (P less than .01) fourfold over baseline by 48 h of treatment, then declined slightly by 120 h. The activities of diacylglycerol acyltransferase (DGAT) and glycerolphosphate acyltransferase (GPAT) in hepatic microsomes increased during treatment but appeared to follow a slightly different pattern from that of PAP. Activity of GPAT was not above baseline at 48 h, but was at 120 h (P less than .05); DGAT activity was increased (P less than .05) twofold at 48 h, with an apparent continued increase (P less than .01) to threefold over baseline by 120 h of treatment. Fatty liver appeared to develop during a period of rapid hepatic uptake of NEFA without a corresponding increase in serum lipoprotein concentrations. The activities of PAP, GPAT and DGAT, putative regulators of TG synthesis rate, all increased in liver microsomes during a period of high hepatic NEFA uptake, but that of PAP appeared to coincide most closely with the development of fatty liver.