Mycobacterium tuberculosis possesses an unusual cell wall that is replete with virulence-enhancing lipids. One cell wall molecule unique to pathogenic M. tuberculosis is polyacyltrehalose (PAT), a pentaacylated, trehalose-based glycolipid. Little is known about the biosynthesis of PAT, although its biosynthetic gene cluster has been identified and found to resemble that of the better studied M. tuberculosis cell wall component sulfolipid-1. In this study, we sought to elucidate the function of papA3, a gene from the PAT locus encoding a putative acyltransferase. To determine whether PapA3 participates in PAT assembly, we expressed the protein heterologously and evaluated its acyltransferase activity in vitro. The purified enzyme catalyzed the sequential esterification of trehalose with two palmitoyl groups, generating a diacylated product similar to the 2,3-diacyltrehalose glycolipids of M. tuberculosis. Notably, PapA3 was selective for trehalose; no activity was observed with other structurally related disaccharides. Disruption of the papA3 gene from M. tuberculosis resulted in the loss of PAT from bacterial lipid extracts. Complementation of the mutant strain restored PAT production, demonstrating that PapA3 is essential for the biosynthesis of this glycolipid in vivo. Furthermore, we determined that the PAT biosynthetic machinery has no cross-talk with that for sulfolipid-1 despite their related structures.