The lipid-binding protein (LBP) family is conserved from Caenorhabditis elegans to mammals and essential for fatty acid homeostasis. RNAi-mediated knockdown of nine C. elegans lbp family members revealed that lbp-5 regulates fat accumulation. C. elegans LBP-5 bound directly to various fatty acids with varying affinities. lbp-5 expression in nhr-49(nr2041) worms was much lower than in N2 worms. Nhr-49 transcriptional activity also decreased with lbp-5 deletion, suggesting that they may work together as functional partners in fat metabolism. In support of this notion, LBP-5 translocated into nuclei, where it appeared to influence C. elegans NHR-49 target genes involved in energy metabolism. Interestingly, LBP-5 is required for stearic acid-induced transcription of NHR-49 target genes. Thus, this knowledge could help identify therapeutic targets to treat obesity and diseases associated with nematode-host interactions.