This literature review is an update of the functions of lipids, with emphasis on their roles in health and disease conditions. Fats transport micronutrients and phytochemicals, thus raising their bioavailability. Fatty acids are needed to maintain brain integrity and function with omega-3 fatty acids being necessary for brain development during fetal and postnatal period upto about 2 years of age. Decosahexaenoic acid is required for optimal maturation of the retina and visual cortex, with visual acuity and mental development seemingly improved by extra DHA. Lipids regulate cell signalling, gene transcription and expression and govern all immune processes. Bioactive lipid mediators are generated from PUFAs, especially EPA, DHA and DPA. Eicosapentaenoic acid promotes antiplatelet aggregation and vasodilation, is anti-inflammatory and maintains plasma triglyceride levels low. Decosapentaenoic acid enables alterations in membrane structure and function, influences membrane protein function, cellular signalling and lipid mediator production. Low DHA levels have been linked to poor cognitive development and visual function, while DPA reduces platelet aggregation, improves lipid metabolism, endothelial cell migration, and resolution of chronic inflammation. Omega-3 PUFAs minimize bone mineral loss in old age and may prevent age-related macular degeneration and dry eye disease. However, the association of bone mineral density with n-3 fatty acid intake requires further research. Although immunomodulation through the essential fatty acids has shown promising results in the potential for lipids as therapeutic molecules, the mechanisms of action require further investigation. Lipid ratios are proving to be useful biomarkers for CVD, Alzheimer’s disease and diabetes.