Triacylglycerol lipase with maximal activity at pH 5 was present in adult and fetal lung. The activity was inhibited by serum concentrations used to measure lipoprotein lipase and by 0.5 M NaCl. The activity in homogenates from fetal lung was about 40% of the activity in adult lung homogenates. The activity increased to 80% of the adult levels during the first 24-48 h following birth. Acidic triacylglycerol lipase was present in all subcellular fractions from adult lung. However, the major amount of activity appeared to be associated with lysosomes. Fetal lung contained significantly more activity in the cytosolic fraction compared to the adult. The reaction produced free fatty acids (65%), 1,2(2,3)-diacylglycerol (22%) and 2-monoacylglycerol (12%). Minimal amounts of 1,3-diacylglycerol and 1(3)-monoacylglycerol were formed. Diacylglycerol lipase and monoacylglycerol hydrolase activities at pH 5 were independently determined and both were higher than the triacylglycerol lipase activity. The subcellular distribution of diacylglycerol lipase and monoacylglycerol hydrolase differed from that of triacylglycerol lipase. Overall, the results indicated that the lung has considerable intracellular lipase activity and therefore could readily hydrolyze intracellular triacylglycerol to free fatty acids. The reaction also produced significant amounts of 1,2-diacylglycerol which suggests that triacylglycerol could be a direct source of diacylglycerol for phospholipid synthesis.