This review addresses the hypothesis that polyunsaturated fatty acids (PUFA), particularly those of the n-3 family, play essential roles in the maintenance of energy balance and glucose metabolism. The data discussed indicate that dietary PUFA function as fuel partitioners in that they direct glucose toward glycogen storage, and direct fatty acids away from triglyceride synthesis and assimilation and toward fatty acid oxidation. In addition, the n-3 family of PUFA appear to have the unique ability to enhance thermogenesis and thereby reduce the efficiency of body fat deposition. PUFA exert their effects on lipid metabolism and thermogenesis by upregulating the transcription of the mitochondrial uncoupling protein-3, and inducing genes encoding proteins involved in fatty acid oxidation (e.g. carnitine palmitoyltransferase and acyl-CoA oxidase) while simultaneously down-regulating the transcription of genes encoding proteins involved in lipid synthesis (e.g. fatty acid synthase). The potential transcriptional mechanism and the transcription factors affected by PUFA are discussed. Moreover, the data are interpreted in the context of the role that PUFA may play as dietary factors in the development of obesity and insulin resistance. Collectively the results of these studies suggest that the metabolic functions governed by PUFA should be considered as part of the criteria utilized in defining the dietary needs for n-6 and n-3 PUFA, and in establishing the optimum dietary ratio for n-6:n-3 fatty acids.