In many areas of Sri Lanka the coconut tree and its products have for centuries been an integral part of life, and it has come to be called the "Tree of life". However, in the last few decades, the relationship between coconut fats and health has been the subject of much debate and misinformation. Coconut fats account for 80% of the fat intake among Sri Lankans. Around 92% of these fats are saturated fats. This has lead to the belief that coconut fats are 'bad for health', particularly in relation to ischaemic heart disease. Yet most of the saturated fats in coconut are medium chain fatty acids whose properties and metabolism are different to those of animal origin. Medium chain fatty acids do not undergo degradation and re-esterification processes and are directly used in the body to produce energy. They are not as 'bad for health' as saturated fats. There is the need to clarify issues relating to intake of coconut fats and health, more particularly for populations that still depend on coconut fats for much of their fat intake. This paper describes the metabolism of coconut fats and its potential benefits, and attempts to highlight its benefits to remove certain misconceptions regarding its use.