Hepatic metabolism of fatty acids is impaired in experimental animals with long-term bile duct ligation. To characterize the underlying defects, fatty acid metabolism was investigated in isolated hepatocytes and isolated liver mitochondria from rats subjected to long-term bile duct ligation or sham surgery. After starvation for 24 hr, the plasma beta-hydroxybutyrate concentration was decreased in rats with bile duct ligation as compared with control rats. Production of beta-hydroxybutyrate from butyrate, octanoate and palmitate by hepatocytes isolated from rats subjected to bile duct ligation was also decreased. Liver mitochondria from rats subjected to bile duct ligation showed decreased state 3 oxidation rates for L-glutamate, succinate, duroquinone, and fatty acids but not for ascorbate as substrate. State 3u oxidation rates (uncoupling with dinitrophenol) and activities of mitochondrial oxidases were also decreased in mitochondria from rats subjected to bile duct ligation. Direct assessment of the activities of the subunits of the electron transport chain revealed reduced activities of complex I, complex II and complex III in mitochondria from rats subjected to bile duct ligation. Activities of the beta-oxidation enzymes specific for short-chain fatty acids were all reduced in rats subjected to bile duct ligation. Mitochondrial protein content per hepatocyte was increased by 32% in rats subjected to bile duct ligation compared with control rats. Thus the studies directly demonstrate mitochondrial defects in fatty acid oxidation in rats subjected to bile duct ligation, which explain decreased ketosis during starvation.