1. Fatty acids from dietary lipids and adipose tissue must be transported into mitochondria and activated to fatty acyl-CoA before undergoing beta-oxidation to acetyl-CoA. 2. Fatty acids are oxidized in mitochondria through beta-oxidation, which breaks them down into acetyl-CoA in a process similar to glycolysis. 3. When the liver produces excess acetyl-CoA, it is converted into ketone bodies that can be used as fuel by other tissues.