Abstract Objective: Evidence indicates that estrogen depresses hepatic lipid oxidation. We tested the hypothesis that estradiol (E 2 ) treatment depresses transcription of carnitine palmitoyltransferase‐1 ( Cpt 1 ) mRNA and increases adiposity. Research Methods and Procedures: Six ovariectomized female rats were given a subcutaneous pellet of E 2 (5 mg/d), and six were given placebo. Rats were pair‐fed by group for 18 days. Body composition was assessed chemically: mRNA for liver Cpt 1 , adipose tissue uncoupling protein‐2 ( Ucp 2 ), and quadriceps Ucp 3 by Northern analysis; serum glucose, triglycerides (TGs), and free fatty acids by standard techniques; and serum insulin and glucagon by radioimmunoassay. Results: E 2 ‐treated rats lost more weight than placebo‐treated rats (37.3 ± 6.0 vs. 16.2 ± 2.6 g, p < 0.01), but did not differ in final carcass composition (adjusted for eviscerated body mass). E 2 ‐treated rats had lower liver Cpt 1 ( p < 0.001) and skeletal muscle Ucp 3 ( p < 0.05) mRNA and lower concentrations of glucose, glucagon, and free fatty acids ( p < 0.05). E 2 ‐treated rats tended to have higher insulin ( p = −0.067) and TG ( p = 0.097). TG tended to be correlated with Cpt 1 mRNA ( r = −0.56 and p = 0.07). Discussion: These results suggest that, although E 2 is likely to suppress lipid oxidation and promote TG synthesis, these effects are not manifested in a relative increase in carcass adiposity after 18 days of treatment, at least under conditions of negative energy balance. The possible role of E 2 ‐mediated changes in insulin and glucagon secretion on hepatic substrate metabolism warrants further study.