Flesh quality, including beneficial fatty acid composition and physicochemical qualities, is the most important factor for many consumers. The actions and mechanisms of promotion of polyunsaturated fatty acid (PUFA) contents, muscle hardness, and related signalling pathways by lipids were investigated in sub-adult grass carp. In this experiment, 450 healthy grass carp (initial body weight 756.57 ± 1.28 g) were selected and randomly divided into 6 treatments, and fish in each group were fed diets with different lipid levels (0.79, 1.58, 2.72, 4.06, 5.16, and 6.33%) for 60 days. The results showed that compared with the control group (0.79% lipid diet), the optimal lipid levels in the diet increased the percentage of weight gain (PWG), feed intake (FI) and flesh rate (P < 0.05), indicating that lipids improved the growth performance of sub-adult grass carp. The optimal levels of lipids also increased muscle PUFA content, including eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA) (P < 0.05), which demonstrated that lipids improved beneficial fatty acid composition in the muscle. Meanwhile, optimal lipid levels increased muscle shear force, collagen content and myofibre density (P < 0.05), which indicated that lipids improved muscle physicochemical qualities. We further explored the mechanism of lipid-increased muscle PUFA content and muscle hardness in fish. We observed that the increase in muscle PUFA content by optimal lipid levels may be related to the promotion of LC-PUFA biosynthesis and catabolism signalling pathways (LXRα/SREBP-1, Sp1, and PPARα) in fish. Meanwhile, the enhancement of muscle hardness by optimal levels of lipids may be associated with the increase in collagen content as well as the improvement of the muscle histological characteristics (diameter and density) in fish. The increase in the muscle collagen content may be related to lipids motivating collagen synthesis pathways including the TGF-β1/Smads pathway at the transcriptional level and the PI3K/Akt/LARP6 signalling pathway at the initial stage of translation. In addition, the increase in muscle fibre density may be attributed to lipid-upregulated MRFs (MyoD, MyoG and Myf5) mRNA levels and decreased myostatin (MSTN1 and MSTN2) mRNA levels (P < 0.05), which were involved in myofibre development. Collectively, lipid-improved flesh quality, including beneficial muscle fatty acid composition and physicochemical qualities, is connected with the activation of related signalling pathways and regulatory factors. Moreover, based on PWG and muscle shear force, the dietary lipid requirements for sub-adult grass carp (756–1459 g) were 4.01% and 3.65% of the diet, respectively.