Single cell oils (SCOs) are now produced by various microorganisms as commercial sources of arachidonic acid (ARA) and docosahexaenoic acid (DHA). These oils are now used extensively as dietary supplements in infant formulas. An understanding of the underlying biochemistry and genetics of oil accumulation in such microorganisms is therefore essential if lipid yields are to be improved. Also an understanding of the biosynthetic pathways involved in the production of these polyunsaturated fatty acids (PUFAs) is also highly desirable as a prerequisite to increasing their content in the oils. An account is provided of the biosynthetic machinery that is necessary to achieve oil accumulation in an oleaginous species where it can account for lipid build up in excess of 70% of the cell biomass. Whilst PUFA production in most microorganisms uses a conventional fatty acid synthase (FAS) system followed by a series of desaturases and elongases, in Schizochytrium sp., and probably related thraustochytrid marine protists, PUFA synthesis now appears to be via a polyketide synthase (PKS) route. This route is discussed. It clearly represents a major departure from conventional fatty acid biosynthesis, possibly as a means of decreasing the amount of NADPH that is needed in the overall process.