Changes in mitochondrial morphology are associated with nutrient utilization, but the precise causalities and the underlying mechanisms remain unknown. Here, using cellular models representing a wide variety of mitochondrial shapes, we show a strong linear correlation between mitochondrial fragmentation and increased fatty acid oxidation (FAO) rates. Forced mitochondrial elongation following MFN2 over-expression or DRP1 depletion diminishes FAO, while forced fragmentation upon knockdown or knockout of MFN2 augments FAO as evident from respirometry and metabolic tracing. Remarkably, the genetic induction of fragmentation phenocopies distinct cell type-specific biological functions of enhanced FAO. These include stimulation of gluconeogenesis in hepatocytes, induction of insulin secretion in islet β-cells exposed to fatty acids, and survival of FAO-dependent lymphoma subtypes. We find that fragmentation increases long-chain but not short-chain FAO, identifying carnitine O-palmitoyltransferase 1 (CPT1) as the downstream effector of mitochondrial morphology in regulation of FAO. Mechanistically, we determined that fragmentation reduces malonyl-CoA inhibition of CPT1, while elongation increases CPT1 sensitivity to malonyl-CoA inhibition. Overall, these findings underscore a physiologic role for fragmentation as a mechanism whereby cellular fuel preference and FAO capacity are determined.