The experimental validation of genes predicted from genomic sequence and the identification of functions for these genes is an increasingly important task. We report a multidisciplinary analysis of CG3488, a predicted gene adjacent to Mothers against dpp in Drosophila melanogaster. We cloned and sequenced a cDNA corresponding to CG3488 and we show that it is expressed in embryos. A computational analysis shows that CG3488 contains a number of conserved domains present in enzymes capable of lipid hydrolysis. A phylogenetic analysis shows that CG3488 is the homolog of human alpha/beta hydrolase2 and that these genes belong to a novel multigene family with members in animals, plants, fungi, and bacteria. A genetic analysis shows that heterozygosity for a chromosomal deletion that removes CG3488 dominantly enhances the excess lipid phenotype associated with a mutation in adipose, an uncloned obesity gene. Further, overexpression of a CG3488 transgene rescues this obesity phenotype. Overall, the data suggests that CG3488 functions as a lipase and that analyses of its homologs will provide unique insights into lipid metabolism in many species.