Lipids are components of our diet and luminal secretions, with physicochemical characteristics that determine their digestion and absorption in the gastrointestinal tract. Lipids include triglycerides, phospholipids, and cholesterol. Dietary lipids contain approximately 97% triglycerides, with small amounts of phospholipids and cholesterol. These components are important in cell membrane composition, fluidity, peroxidation, prostaglandin and leukotriene synthesis, and cellular metabolic processes. Lipids are implicated in the mechanisms of brain development, inflammatory processes, atherosclerosis, carcinogenesis, aging, and cell renewal. Duodenal hydrolysis of dietary lipids and biliary phospholipids and cholesterol is carried out by pancreatic lipase, colipase, phospholipase A2, and cholesterol esterase. Bile acid solubilization results in mixed micelles and liposomes, in gel and liquid crystal phases. Lipid digestion products pass across the intestinal unstirred water layer. For long-chain fatty acids and cholesterol, passage across the unstirred water layer is rate limiting, whereas passage of short- and medium-chain fatty acids is limited by the brush-border membrane. Within the unstirred water layer, an acidic microclimate aids micellar dissociation so that protonated, and to a lesser extent, nonprotonated monomers then pass across the intestinal brush-border membrane. Absorptive mechanisms have been studied extensively in relation to lipid composition, fatty acid chain length, degree of unsaturation, essential fatty acid content, phospholipid components, and cholesterol. Enterocytes may take up lipids from the intestinal lumen or from lipoproteins of the bloodstream, but these pools are likely to be functionally distinct. Recent advances are reviewed, including recent advances in the area of microclimates, compartmentation, lipid binding proteins, intracellular trafficking, intestinal lipoproteins, release of lipids across the basolateral membrane, and dietary effects.Key words: diet effects, lipid binding proteins, lipoproteins.