Glycosyl phosphatidylinositol (GPI) anchors in the bloodstream form of Trypanosoma brucei are unusual in that their two fatty acids are myristate. The myristates are added in the final stages of GPI biosynthesis in a remodeling reaction. Remodeling occurs first at the sn-2 position of glycerol, involving removal of a longer fatty acid and subsequent attachment of myristate. The second myristate is then incorporated into the sn-1 position, but the mechanism has been unclear due to the unavailability of a reliable cell-free system supporting complete remodeling. Here, we first refined the cell-free system (by removing Mn(2+) ions), thereby allowing efficient production of the dimyristoylated GPI precursor. Using this improved system, we made three new discoveries concerning the pathway for fatty acid remodeling. First, we discovered a monomyristoylated GPI (known as glycolipid theta') as an intermediate involved in remodeling at the sn-1 position. Second, we found an alternative pathway for production of glycolipid theta, the first lyso intermediate in remodeling. The alternative pathway involves an inositol-acylated GPI known as glycolipid lyso-C'. Finally, we found that there is significant breakdown of GPIs during remodeling in the cell-free system, and we speculate that this breakdown has a regulatory role in GPI biosynthesis.