1. Three sheep were given three diets, a control diet consisting mainly of cereals, a similar diet incorporating linseed oil (mainly glycerides of linolenic acid) and a diet incorporating free fatty acids derived from linseed oil. The diets were given at the maintenance level and at twice this level according to a latin square design. 2. Complete energy balance was obtained and the digestibilities of cellulose and lipid were determined with each sheep receiving each diet. The relative amounts of various fatty acids in the dietary and faecal lipids were also estimated. 3. The inclusion of lipids in the diet resulted in a significant decrease in cellulose digestion, whereas the lipid digestibility increased. 4. The proportion of C18 acids increased in the faeces, and the proportion of bacterial fatty acids decreased, but since the total amount of fatty acids excreted increased, the amount of bacterial fatty acids excreted per day did not differ significantly in animals receiving the control diet and the diets containing added lipids. 5. The addition of lipids to the diet resulted in a highly significant drop in methane production, the depression being about 25% of the control value. The depression (28.9 kcal/100 kcal of fatty acids given) was considerably greater than the depression produced by continuous infusion of the same amount of fatty acids. 6. Because of the depression of CH4 production and of some reduction in the urinary energy losses, the addition of lipids to the basal diet increased the metabolizable energy by about 9.5 kcal/100 g of the basal diet. 7. The efficiencies of utilization of metabolizable energy were not significantly affected by addition of lipids, being about 82% for maintenance and 62% for fattening. 8. In an experiment with one sheep, comparison was made between the effect of slow continous infusion of fatty acids over 24 h and the effect of rapid infusion of the same amount twice daily during feeding. The continuous infusion of linseed oil fatty acids resulted in a drop in CH4 production of 16.3 kcal/100 kcal of fatty acids given. This was in good agreement with previous findings. Rapid infusion of these fatty acids resulted in a drop in CH, production, amounting to 28.0 kcal/100 kcal of fatty acids infused. This is comparable with the reduction of 28.9 kcal/100 kcal fatty acids when the fatty acids were incorporated in the diet.