The effect of the water content on the lipase-catalyzed (Candida rugosa) interesterification (acidolysis) of menhaden oil with conjugated linoleic acid was studied for amounts of added water ranging from 0-4% (w/w). The rate of the acidolysis reaction increased with increasing water content, but the corresponding percentage of n-3 fatty acids liberated also increased. The implications of water content for minimization of the release of n-3 fatty acid residues while maximizing incorporation of CLA are discussed.