The partitioning of fatty acids between membrane and storage lipids controls ER membrane expansion.
The biogenesis of membrane-bound organelles involves the synthesis, remodelling and degradation of their constituent phospholipids. How these pathways regulate organelle size, remains still poorly understood. Here we demonstrate that a lipid degradation pathway inhibits the expansion of the endoplasmic reticulum (ER) membrane. Phospholipid diacylglycerol acyltransferases (PDATs) use endogenous phospholipids as fatty acyl donors to generate triglyceride stored in lipid droplets. The significance of this non-canonical triglyceride biosynthetic pathway has remained elusive. We find that the activity of the yeast PDAT Lro1 is regulated by a membrane- proximal domain facing the luminal side of the ER bilayer. To reveal the biological roles of PDATs, we engineered an Lro1 variant with derepressed activity. We show that active Lro1 mediates the retraction of ER membrane expansion driven by phospholipid synthesis. Furthermore, the subcellular distribution and membrane turnover activity of Lro1 are controlled by diacylglycerol, produced by the activity of Pah1, a conserved member of the lipin family. Collectively, our findings reveal a lipid metabolic network that regulates endoplasmic reticulum biogenesis by converting phospholipids into storage lipids.