We investigated the fate of exogenous fatty acid in connection with decreased hepatic accumulation and secretion of cholesteryl esters in rats fed diets containing taurine. Providing taurine as 5% of the diet for 14 d significantly decreased concentrations of cholesterol, especially cholesteryl esters in both serum and liver. Ketone body production and incorporation of exogenous [1-¹⁴C]oleate into ketone bodies in liver perfusate were consistently higher during a 4-h perfusion period in taurine-fed rats than in control rats. The elevation was accompanied by increased activity of liver mitochondrial carnitine palmitoyltransferase, a rate-limiting enzyme for fatty acid oxidation. Dietary taurine significantly reduced hepatic secretion of cholesteryl ester and decreased incorporation of exogenous oleic acid substrate into this lipid molecule. Further, the extent of reduction in hepatic secretion of cholesteryl ester was closely related to its diminished accumulation in the liver. The conversion pattern of exogenous [1-¹⁴C]oleic acid substrate suggested a decreased esterification-to-oxidation ratio in the taurine group compared with the control. These results suggest that taurine-induced reduction in hepatic accumulation of cholesteryl ester was associated with reduced hepatic secretion of this lipid molecule, and was inversely related to enhanced ketone body production and fatty acid oxidation.