In fasted rats, casein hydrolysate administration resulted in a marked increase in glycogen synthase I activity, no change in phosphorylase a and a marked decrease in glycogen concentration. This occurred with doses as small as 0.5 g/kg body weight. The major reason for an increase in synthase I appeared to be the reduced glycogen concentration, although insulin may play a role early in the time course. The decrease in glycogen in the absence of a change in phosphorylase a most likely is due to a decrease in an allosteric inhibitor. The nature of this inhibitor is unknown.