Microdroplets in the hyphae of Ashbya gossypii were found to become stained by Nile red. Purification of the stainable substance showed that the yellow fluorescent bodies consisted of triacylglycerol. During growth on glucose as the carbon source 8%-12% of the mycelial dry weight was found to be neutral lipid. When glucose declined in the medium, the content decreased to 3%-4% and the respiration quotient shifted to 0.6 indicating a reserve function of the fat. The fatty acid composition of the storage lipid was found to be strongly influenced by the carbon source. Mycelia cultivated on glucose contained 5% linoleie acid and 20% palmitoleic acid in their neutral fat while linoleic acid made up 54% and palmitoleic acid was not detectable (< 0.1%) in soybean-oil-grown mycelia. When plant oil was given as the sole carbon source, the fatty acid composition of the storage lipid showed a high similarity to the fed fat. C-14-labelled free oleic acid added to a culture growing on soybean oil was immediately incorporated into the fungal lipid. A pulse of 0.9 g/l free palmitoleic acid, fed during growth on olive oil, increased the content of this particular fatty acid in the fungal triacylglycerol from 0.8% to 9.6%. In addition, a liberation of free fatty acid and diacylglyceride was found in the culture supernatant when pure triolein was given as the sole carbon source. Obviously, the fungus cleaved the lipid serving as the carbon source extracellularly and used the liberated fatty acids for its storage lipid formation.