The effect of dibutyryl cyclic 3',5'-AMP (dbcAMP) on the oxidation of 1-14Cpalmitate to water-soluble material and ketone bodies was investigated in isolated rat liver cells prepared by perfusion of the liver with collagenase and hyaluronidase. About two-thirds of the label in water-soluble oxidation products was recovered as ketone bodies which were distributed approximately equally between β-hydroxybutyrate and acetoacetate plus acetone. Dibutyryl cAMP (1.0 × 10−3 M) and epinephrine (8 × 10−5 M) both enhanced ketone body formation. Sodium butyrate,which mimics the inhibitory effect of dbcAMP on palmitate oxidation to CO2, had no effect on ketogenesis. The rate of ketogenesis was directly related to the molar ratio of palmitate to albumin. The efficacyof dbcAMP in stimulatingketogenesis also depended upon the molar ratio of plmitate to albumin.Thus, ketone body formation was enhanced by 105, 52, and 13% at molar ratiosof 0.1, 0.4,and 1.6 respectively. Since these results suggest that cyclic AMP modulates the activity of the ketogenic pathway, hormones that alter hepatic levels of cyclic AMP may play an important role in the control of ketogenesis. (Endocrinology94: 1391, 1974)