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The growth of Dictyostelium discoideum Ax-2 was inhibited completely by cerulenin at a concentration of 5 mug/ml. This inhibition of growth was found to be due to the inhibition of fatty acid synthesis. Acetate incorporation into a long-chain fatty acid was inhibited completely by cerulenin, and the growth inhibition could be reversed by inclusion of certain saturated fatty acids in the medium. Unsaturated fatty acids and sterols failed to reverse the inhibitory effect. The fatty acid and sterol compositions of cerulenin-treated cells were determined to establish whether the drug could be used to manipulate the organism's lipid composition. Only relatively small manipulations were obtained under the conditions employed in this study. Cerulenin inhibited differentiation but only at high concentrations (150 mug/ml). This inhibition could be reversed by palmitic acid, suggesting that the prime cause of the inhibition was an inhibition of fatty acid synthesis. Thus, it appears that continued fatty acid synthesis is required for the cellular process of differentiation in D. discoideum.