Acyl CoA:diacylglycerol acyltransferase (DGAT) is an integral membrane protein of the endoplasmic reticulum that catalyzes the synthesis of triacylglycerols. Two DGAT enzymes have been identified (DGAT1 and DGAT2) with unique roles in lipid metabolism. DGAT1 is a multifunctional acyltransferase capable of synthesizing diacylglycerol, retinyl, and wax esters in addition to triacylglycerol. Here, we report the membrane topology for murine DGAT1 using protease protections assays and indirect immunofluorescence in conjunction with selective permeabilization of cellular membranes. Topology models based on prediction algorithms suggested that DGAT1 had eight transmembrane domains. In contrast, our data indicate that DGAT1 has three transmembrane domains with the N terminus oriented toward the cytosol. The C-terminal region of DGAT1, which accounts for ∼50% of the protein, is present in the endoplasmic reticulum lumen and contains a highly conserved histidine residue (His-426) that may be part of the active site. Mutagenesis of His-426 to alanine impaired the ability of DGAT1 to synthesize triacylglycerols as well as retinyl and wax esters in an in vitro acyltransferase assay. Finally, we show that the N-terminal domain of DGAT1 is not required for the catalytic activity of DGAT1 but, instead, may be involved in regulating enzyme activity and dimer/tetramer formation.