The capacity of foetal and neonatal liver to oxidize short-, medium- and long-chain fatty acids was studied in the guinea pig. Liver mitochondria from foetal and newborn animals were unable to synthesize ketone bodies from octanoate, but octanoylcarnitine and palmitoylcarnitine were readily ketogenic. The ketogenic capacity at 24 h after birth was as high as in adult animals. Hepatocytes isolated from term animals were unable to oxidize fatty acids, but at 6 h after birth production of 14CO2, acid-soluble products and acetoacetate from 1-14C-labelled fatty acids was 40-50% of the rates at 24 h. At 12 h of age these rates had already reached the 24 h values and did not change during suckling in the first week of life. The activities of hepatic fatty acyl-CoA synthetases, which were minimal in the foetus or at term, increased to maximal values in 12-24 h. The data show that the capacity for beta-oxidation and ketogenesis develops maximally in this species during the first 6-12 h after birth, and appears to be partly dependent on the development of fatty acid-activating enzyme.