The difference in relative rates of hydrolysis of the 1,3- and the 2-ester bonds of triglycerides (50–100:1) catalyzed by pancreatic lipase results in a rapid net hydrolysis of the 1,3-ester bonds at an enzyme level that effects only limited hydrolysis of the 2-ester bond. The net hydrolysis of the 1,3- or primary ester bonds proceeds until a steady state has been established between rate of hydrolysis and synthesis of the primary ester bonds. This equilibrium state involving the primary hydroxy groups is strongly dependent on the pH of the incubation medium and the presence of bile salt and is reached starting either from triglyceride or from fatty acid and alcohol (using the 2-monoglyceride analogue 2-octadecenyl-glycerol ether). At equilibrium at pH 5.0 about 80% of the primary hydroxy groups are acylated. This unexpected finding seems to be explained by the presence of a two-phase (oil/water) system presenting an interphase where the enzyme is acting at a very low water concentration and allowing lipid-soluble reaction products to be removed into the oil phase. Bile salts affect pancreatic lipolysis under slightly acid conditions by changing the equilibrium state as regards the primary ester bonds more towards hydrolysis, i.e., accumulation of monoglyceride. Other detergents so far tested inhibit pancreatic lipase. The physiological implication of these results seems to be that the transformations catalyzed by pancreatic lipase in the presence of bile salt form a system for the continuous supply of monoglycerides and fatty acids to the brush border of the intestinal cells.