Diatoms are highly successful marine and freshwater algae that contribute up to 20% of global carbon fixation. These species are leading candidates for biofuel production owing to ease of culturing and high fatty acid content. To assist in strain improvement and downstream applications for potential use as a biofuel, it is important to understand the evolution of lipid biosynthesis in diatoms. The evolutionary history of diatoms is however complicated by likely multiple endosymbioses involving the capture of foreign cells and horizontal gene transfer into the host genome. Using a phylogenomic approach, we assessed the evolutionary history of 12 diatom genes putatively encoding functions related to lipid biosynthesis. We found evidence of gene transfer likely from a green algal source for seven of these genes, with the remaining showing either vertical inheritance or evolutionary histories too complicated to interpret given current genome data. The functions of horizontally transferred genes encompass all aspects of lipid biosynthesis (initiation, biosynthesis, and desaturation of fatty acids) as well as fatty acid elongation, and are not restricted to plastid-targeted proteins. Our findings demonstrate that the transfer, duplication, and subfunctionalization of genes were key steps in the evolution of lipid biosynthesis in diatoms and other photosynthetic eukaryotes. This target pathway for biofuel research is highly chimeric and surprisingly, our results suggest that research done on related genes in green algae may have application to diatom models.