Hormone-sensitive lipase (HSL)1 is an intracellular neutral lipase that is highly expressed in adipose and steroidogenic tissues (1). The enzyme has broad substrate specificity, displaying hydrolytic activity against triacylglycerol, diacylglycerol, and cholesteryl ester (2). Observations from HSL-null mice have shown that HSL is responsible for ϳ50% of the neutral triglyceride lipase activity and all of the neutral cholesteryl ester hydrolase activity in white adipose tissue (3). Thus, HSL plays an important role in regulating lipolysis and the release of fatty acids from adipose tissue. The sequence of HSL is unrelated to other mammalian lipases, but it shares sequence and structural similarity with several bacterial and fungal lipases (4 -11). This structural similarity is based on the ability to model a large portion of the C-terminal ϳ450 amino acids of HSL as an ␣/ hydrolase (7); however, the initial ϳ320 amino acids of the protein share no sequence or structural homology with any known proteins. Within the C-terminal region of the protein lies a 150-amino acid sequence that contains a number of sites phosphorylated in response to lipolytic stimulation (7,12,13). In this regard HSL is unique among lipases for the ability of its activity to be up-regulated by phosphorylation. In addition to phosphorylation, HSL activity appears to be regulated by oligomerization, with the dimeric enzyme exhibiting markedly increased activity (14).Utilizing a yeast two-hybrid screen of a rat adipose tissue library, we previously demonstrated that HSL specifically interacts with adipocyte lipid-binding protein (ALBP or aP2) and identified the N-terminal 300 amino acids of HSL as the region responsible for this interaction (15). ALBP is highly expressed in adipose tissue and is a member of the family of intracellular fatty acid-binding proteins that bind fatty acids, retinoids and other hydrophobic ligands (16). It has been proposed that intracellular fatty acid-binding proteins function to sequester fatty acids, thus serving as an intracellular buffer or participating in facilitating the movement of fatty acids within the cell. In view of our observation that HSL and ALBP interact, we proposed that ALBP might prevent feedback inhibition of HSL by high local concentrations of free fatty acids released at the site of hydrolysis. Consistent with this view, adipocytes from ALBP-null mice exhibit markedly reduced basal and stimulated lipolysis both in situ and in vivo (17,18). In the present studies we have addressed the functional significance of the interaction of HSL with ALBP and provide evidence that the interaction of ALBP with HSL constitutes an additional mechanism whereby the hydrolytic activity of HSL is regulated. Furthermore, we have explored the identification of the sequences in HSL that mediate its interaction with ALBP.