Hormone-sensitive lipase (HSL) is an intracellular lipase that plays an important role in the hydrolysis of triacylglycerol in adipose tissue. HSL has been shown to interact with adipocyte lipid-binding protein (ALBP), a member of the family of intracellular lipid-binding proteins that bind fatty acids and other hydrophobic ligands. The current studies have addressed the functional significance of the association and mapped the site of interaction between HSL and ALBP. Incubation of homogeneous ALBP with purified, recombinant HSL in vitro resulted in a 2-fold increase in substrate hydrolysis. Moreover, the ability of oleate to inhibit HSL hydrolytic activity was attenuated by co-incubation with ALBP. Co-transfection of Chinese hamster ovary cells with HSL and ALBP resulted in greater hydrolytic activity than transfection of cells with HSL and vector alone. Deletional mutations of HSL localized the region of HSL that interacts with ALBP to amino acids 192-200, and site-directed mutagenesis of individual amino acids in this region identified His-194 and Glu-199 as critical for mediating the interaction of HSL with ALBP. Interestingly, HSL mutants H194L and E199A, each of which retained normal basal hydrolytic activity, failed to display an increase in hydrolytic activity when co-transfected with wild type ALBP. Therefore, ALBP increases the hydrolytic activity of HSL through its ability to bind and sequester fatty acids and via specific protein-protein interaction. Thus, HSL and ALBP constitute a functionally important lipolytic complex.