Stearoyl CoA desaturase 1 (SCD1) catalyzes the rate-limiting step in the production of MUFA that are major components of tissue lipids. Alteration in SCD1 expression changes the fatty acid profile of these lipids and produces diverse effects on cellular function. High SCD1 expression is correlated with metabolic diseases such as obesity and insulin resistance, whereas low levels are protective against these metabolic disturbances. However, SCD1 is also involved in the regulation of inflammation and stress in distinct cell types, including β-cells, adipocytes, macrophages, endothelial cells, and myocytes. Furthermore, complete loss of SCD1 expression has been implicated in liver dysfunction and several inflammatory diseases such as dermatitis, atherosclerosis, and intestinal colitis. Thus, normal cellular function requires the expression of SCD1 to be tightly controlled. This review summarizes the current understanding of the role of SCD1 in modulating inflammation and stress.