We provide biochemical evidence that enzymes involved in the synthesis of triacylglycerol, namely acyl coenzyme A:diacylglycerol acyltransferase (DGAT) and acyl coenzyme A:monoacylglycerol acyltransferase (MGAT), are capable of carrying out the acyl coenzyme A:retinol acyltransferase (ARAT) reaction. Among them, DGAT1 appears to have the highest specific activity. The apparent K(m) values of recombinant DGAT1/ARAT for retinol and palmitoyl coenzyme A were determined to be 25.9+/-2.1 microM and 13.9+/-0.3 microM, respectively, both of which are similar to the values previously determined for ARAT in native tissues. A novel selective DGAT1 inhibitor, XP620, inhibits recombinant DGAT1/ARAT at the retinol recognition site. In the differentiated Caco-2 cell membranes, XP620 inhibits approximately 85% of the Caco-2/ARAT activity indicating that DGAT1/ARAT may be the major source of ARAT activity in these cells. Of the two most abundant fatty acyl retinyl esters present in the intact differentiated Caco-2 cells, XP620 selectively inhibits retinyl-oleate formation without influencing the retinyl-palmitate formation. Using this inhibitor, we estimate that approximately 64% of total retinyl ester formation occurs via DGAT1/ARAT. These studies suggest that DGAT1/ARAT is the major enzyme involved in retinyl ester synthesis in Caco-2 cells.