The pathway for the synthesis of diacylglycerol in larval Manduca sexta midgut was studied. Fifth instar larvae were fed with [9, 10-(3)H]-oleic acid-labeled triolein and the incorporation of the label into lipid intermediates was analyzed as a function of time. The results showed that the triacylglycerol was hydrolyzed to fatty acids and glycerol in the midgut lumen. In midgut tissue, the labeled fatty acids were rapidly incorporated into phosphatidic acid, diacylglycerol and triacylglycerol, but no significant labeling of monoacylglycerol was observed. Dual-labeling experiments were performed in order to characterize the kinetics of diacylglycerol biosynthesis in the midgut, its incorporation into hemolymph lipophorin and its clearance from hemolymph. The results were best described by a model in which the rate-limiting step in diacylglycerol biosynthesis was the uptake of fatty acid from the lumen of the midgut. Once in the cell the fatty acid was rapidly incorporated in phosphatidic acid and diacylglycerol. Diacylglycerol was converted to triacylglycerol or exported into hemolymph. The interconversion of diacylglycerol and triacylglycerol was fairly rapid, suggesting that triacylglycerol serves as a reservoir from which diacylglycerol can be produced. This mechanism permits the cell to maintain a low steady-state concentration of diacylglycerol and yet efficiently absorb fatty acids from the lumen of the midgut.