The lipid-rich cell wall is a defining feature of Mycobacterium species. Individual cell wall components affect diverse mycobacterial phenotypes including colony morphology, biofilm formation, antibiotic resistance, and virulence. In this study, we describe a transposon insertion mutant of Mycobacterium smegmatis mc2 155 that exhibits altered colony morphology and defects in biofilm formation. The mutation was localized to the lsr2 gene. First identified as an immunodominant T-cell antigen of Mycobacterium leprae, lsr2 orthologs have been identified in all sequenced mycobacterial genomes, and homologs are found in many actinomycetes. Although its precise function remains unknown, localization experiments indicate that Lsr2 is a cytosolic protein, and cross-linking experiments demonstrate that it exists as a dimer. Characterization of cell wall lipid components reveals that the M. smegmatis lsr2 mutant lacks two previously unidentified apolar lipids. Characterization by mass spectrometry and thin-layer chromatography indicate that these two apolar lipids are novel mycolate-containing compounds, called mycolyl-diacylglycerols (MDAGs), in which a mycolic acid (alpha- or alpha'-mycolate) molecule is esterified to a glycerol. Upon complementation with an intact lsr2 gene, the mutant reverts to the parental phenotypes and MDAG production is restored. This study demonstrates that due to its impact on the biosynthesis of the hydrophobic MDAGs, Lsr2 plays an important role in the colony morphology and biofilm formation of M. smegmatis.