Most lipases contain a lid domain to shield the hydrophobic binding site from the water environment. The lid, mostly in helical form, can undergo a conformational change to expose the active cleft during the interfacial activation. Here we report the crystal structures of Malassezia globosa LIP1 (SMG1) at 1.45 and 2.60 angstrom resolution in two crystal forms. The structures present SMG1 in its closed form, with a novel lid in loop conformation. SMG1 is one of the few members in the fungal lipase family that has been found to be strictly specific for mono- and diacylglycerol. To date, the mechanism for this substrate specificity remains largely unknown. To investigate the substrate binding properties, we built a model of SMG1 in open conformation. Based on this model, we found that the two bulky hydrophobic residues adjacent to the catalytic site and the N-terminal hinge region of the lid both may act as steric hindrances for triacylglycerols binding. These unique structural features of SMG1 will provide a better understanding on the substrate specificity of mono- and diacylglycerol lipases and a platform for further functional study of this enzyme. (c) 2012 Elsevier Inc. All rights reserved.