C75, a known inhibitor of fatty acid synthase is postulated to cause significant weight loss through decreased hypothalamic neuropeptide Y (NPY) production. Peripherally, C75, an α-methylene-γ-butyrolactone, reduces adipose tissue and fatty liver, despite high levels of malonyl-CoA. To investigate this paradox, we studied the effect of C75 on fatty acid oxidation and energy production in diet-induced obese (DIO) mice and cellular models. Whole-animal calorimetry showed that C75-treated DIO mice had a 50% greater weight loss, and a 32.9% increased production of energy because of fatty acid oxidation, compared with paired-fed controls. Etomoxir, an inhibitor of carnitine O-palmitoyltransferase-1 (CPT-1), reversed the increased energy expenditure in DIO mice by inhibiting fatty acid oxidation. C75 treatment of rodent adipocytes and hepatocytes and human breast cancer cells increased fatty acid oxidation and ATP levels by increasing CPT-1 activity, even in the presence of elevated concentrations of malonyl-CoA. Studies in human cancer cells showed that C75 competed with malonyl-CoA, as measured by CPT-1 activity assays. Thus, C75 acts both centrally to reduce food intake and peripherally to increase fatty acid oxidation, leading to rapid and profound weight loss, loss of adipose mass, and resolution of fatty liver. The pharmacological stimulation of CPT-1 activity is a novel finding. The dual action of the C75 class of compounds as fatty acid synthase inhibitors and CPT-1 agonists has therapeutic implications in the treatment of obesity and type II diabetes.