Hormone sensitive lipase (HSL) is an enzyme of relatively broad specificity, having the ability to hydrolyze tri-, di- and mono-acylglycerols as well as cholesterol esters and small water-soluble substrates. This broad specificity allows HSL to perform a variety of functions in several tissues. A key feature of HSL is its ability to be activated via phosphorylation by cyclic AMP-dependent protein kinase. In addition it is phosphorylated at a second site by several kinases, notably AMP-activated protein kinase. Phosphorylation of this site apparently plays a role in rendering the enzyme hormone-insensitive, in that prior phosphorylation at site 2 prevents phosphorylation and activation at site 1 by cyclic AMP-dependent protein kinase. Investigation of the protein phosphatases responsible for dephosphorylation of these sites has indicated that phosphatase 2A plays a predominant role but also that protein phosphatase 2C is a significant phosphatase targeted against both phosphorylation sites. Evidence indicates that HSL has at least three functional domains which contain (a) the phosphorylation sites which control activity, (b) the active site responsible for the catalytic activity and (c) a lipid binding site responsible for anchoring the lipase at the water-lipid interface. Using limited proteolytic studies we have found that it is possible to cleave HSL into several fragments including a stable domain of M(r) approximately 17.6 kDa which contains the active site serine residue. Digestion under similar conditions also generates a stable domain of M(r) approximately 11.5 kDa containing both phosphorylation sites. Furthermore, under appropriate conditions it is possible to digest HSL and retain activity against water-soluble substrates but with the concomitant loss of activity against triacylglycerol, implying that a lipid binding domain is lost during this procedure. HSL is responsible for the neutral cholesterol esterase activity in macrophages and it may play a role in the accumulation of cholesterol esters which occur during the development of foam cells. HSL activity is reduced in macrophage foam cells, at least partly due to increased activity of a cytosolic HSL inhibitor protein. A finding unexplained for many years has been that, although lipolysis can be stimulated 50-100-fold in adipocytes by lipolytic hormones, HSL can apparently only be activated 2-3-fold via phosphorylation in vitro by cyclic AMP-dependent protein kinase. One possibility to explain this discrepancy is that an additional anchoring protein is missing from the in vitro system and indirect evidence is now accumulating for such a protein.