These experiments show that it is possible to cause, by the proper use of hydrazine and phosphorus, a very high degree of fatty change in the liver with a minimum of necrosis, involving alike both peripheral and central portions of the lobule and thus eliminating the " factor of safety" or residual normal cells. Nevertheless, it is found that such fatty liver tissue has not lost in the least its power to oxidize uric acid when acting upon it in vitro with abundant air supply, nor is the power to oxidize xanthine to uric acid noticeably diminished. Since these two enzymes, and especially the uricolytic enzyme, are about the last to appear in the development of the animal kingdom and also of the individual mammal, it is to be expected that they will be among the first of the enzymes to be destroyed by injurious agencies, but evidently they are not affected by conditions that lead to the highest degree of fatty metamorphosis of the cytoplasm of the hepatic cells. While these experiments merely prove that extreme fatty degeneration does not destroy or appreciably diminish the power of liver cells to oxidize uric acid and xanthine in vitro, yet they suggest that in general fatty degeneration is probably not essentially incompatible with a high degree of metabolic activity by the affected cells. It is possible that in the living tissue functional activity may be decreased secondarily by fatty metamorphosis, as, for example, by the enlarged fatty cells compressing the capillaries and reducing circulatory activity, or by modification of diffusion through the cell by the fat deposits, independent of any deleterious influence upon the cellular enzymes themselves. Other experiments will be required to determine whether steatogenic poisons leave intrahepatic enzymes other than the uricase equally unaffected, but as it has already been shown by Jacoby that the autolytic enzymes and aldehydase in the liver cells are not destroyed by phosphorus poisoning, and Abderhalden and Schittenhelm* found that peptids are hydrolyzed fully as rapidly by phosphorus livers as by normal livers, it seems probable that extreme fatty metamorphosis is not associated with any serious injury to the enzymes by which the liver cells perform their metabolic functions, with the possible exception of those enzymes concerned with the metabolism of fats.