The malaria parasite Plasmodium falciparum induces a sixfold increase in the phospholipid content of infected erythrocytes during its intraerythrocytic growth. We have characterized the lipid environments in parasitized erythrocyte using the hydrophobic probe, Nile Red. Spectral imaging with a confocal microscope revealed heterogeneous lipid environments in parasite-infected erythrocytes. An insight into the nature of these environments was gained by comparing these spectra with those of triacylglycerol/phospholipid emulsions and phospholipid membranes. Using this approach, we identified a population of intensely stained particles of a few hundred nanometers in size that are closely associated with the digestive vacuole of the parasite and appear to be composed of neutral lipids. Electron microscopy and isolation of food vacuoles confirmed the size of these particles and their intimate association respectively. Lipid analysis suggests that these neutral lipid bodies are composed of di- and triacylgycerols and may represent storage organelles for lipid intermediates that are generated during digestion of phospholipids in the food vacuole. Mono-, di- and triacylglycerol suspensions promote beta-haematin formation, suggesting that these neutral lipid bodies, or their precursors, may also be involved in haem detoxification. We also characterized other compartments of the infected erythrocyte that were stained less intensely with the Nile Red probe. Both the erythrocyte membrane and the parasite membrane network exhibit red shifts compared with the neutral lipid bodies that are consistent with cholesterol-rich and cholesterol-poor membranes respectively. Ratiometric imaging revealed more subtle variations in the lipid environments within the parasite membrane network.