Dietary fat consist of triacylglycerol, cholesterol, cholesterol esters, phospholipid and free fatty acids. Dietary lipids after digestion are transported from the mucosal cells into the lymph in the form of chylomicrons. Fatty acids are transported across the inner mitochondrial membrane by carnitine and degraded in mitochondrial matrix by a process called β-oxidation. De novo syntheses of fatty acids occur in the cytosol. The ketone bodies acetoacetate, β hydroxybutyrate and acetone are formed in the liver and oxidized by extrahepatic tissues. Overproduction of ketone bodies leads to ketosis. Triacylglycerol and some phospholipids are synthesized by progressive acylation of glycerol-3-phosphate. All sphingolipids are formed from ceramide. Phospholipids and sphingolipids are involved in several disease processes including respiratory distress syndrome and sphingolipidoses. Cholesterol and other lipids are transported in the plasma as lipoproteins. Four major groups of lipoproteins are chylomicrons, very low density lipoprotein (VLDL), low density lipoprotein (LDL), high density lipoprotein (HDL). Imbalance in the rate of triacylglycerol formation and VLDL formation in the liver leads to fatty liver. Adipose tissue is the main store of triacylglycerol. Acetyl CoA is the precursor of cholesterol synthesis. Cholesterol is the precursor of all steroid hormones, bile acids and vitamin D. Elevated levels of cholesterol present in VLDL and LDL are associated with atherosclerosis, whereas high levels of HDL have a protective effect. Liver is the major site of ethanol oxidation.