In the yeast Saccharomyces cerevisiae, neutral lipids can be synthesized by four acyltransferases, namely Dga1p and Lro1p producing triacylglycerols (TAG) and Are1p and Are2p forming steryl esters (SE). TAG and SE are stored in an organelle called lipid particles/droplet. Growth of yeast cells on oleate-supplemented media strongly induced proliferation of lipid particles and specifically the synthesis of TAG, which serve as the major pool for the excess of fatty acids. Surprisingly, SE synthesis was strongly inhibited under these conditions. Here, we show that this effect was not due to decreased expression of ARE2 encoding the major yeast SE synthase at the transcriptional level but to competitive enzymatic inhibition of Are2p by free oleate. Consequently, a triple mutant dga1Deltalro1Deltaare1DeltaARE2(+) grown on oleate did not form substantial amounts of SE and exhibited a growth phenotype similar to the dga1Deltalro1Deltaare1Deltaare2Delta quadruple mutant, including lack of lipid particles. Growth of these mutants on oleate was strongly delayed, and cell viability was decreased but rescued by adaptation. In these strains, oleate stress caused morphological changes of intracellular membranes, altered phospholipid composition and formation of an additional lipid class, ethyl esters of fatty acids. In summary, our data showed that exposure to oleate led to disturbed lipid and membrane homeostasis along with liposensitivity of the yeast.