Two billion people are latently infected with Mycobacterium tuberculosis (Mtb). Mtb-infected macrophages are likely to be sequestered inside the hypoxic environments of the granuloma and differentiate into lipid-loaded macrophages that contain triacylglycerol (TAG)-filled lipid droplets which may provide a fatty acid-rich host environment for Mtb. We report here that human peripheral blood monocyte-derived macrophages and THP-1 derived macrophages incubated under hypoxia accumulate Oil Red O-staining lipid droplets containing TAG. Inside such hypoxic, lipid-loaded macrophages, nearly half the Mtb population developed phenotypic tolerance to isoniazid, lost acid-fast staining and accumulated intracellular lipid droplets. Dual-isotope labeling of macrophage TAG revealed that Mtb inside the lipid-loaded macrophages imports fatty acids derived from host TAG and incorporates them intact into Mtb TAG. The fatty acid composition of host and Mtb TAG were nearly identical suggesting that Mtb utilizes host TAG to accumulate intracellular TAG. Utilization of host TAG by Mtb for lipid droplet synthesis was confirmed when fluorescent fatty acid-labeled host TAG was utilized to accumulate fluorescent lipid droplets inside the pathogen. Deletion of the Mtb triacylglycerol synthase 1 (tgs1) gene resulted in a drastic decrease but not a complete loss in both radiolabeled and fluorescent TAG accumulation by Mtb suggesting that the TAG that accumulates within Mtb is generated mainly by the incorporation of fatty acids released from host TAG. We show direct evidence for the utilization of the fatty acids from host TAG for lipid metabolism inside Mtb. Taqman real-time PCR measurements revealed that the mycobacterial genes dosR, hspX, icl1, tgs1 and lipY were up-regulated in Mtb within hypoxic lipid loaded macrophages along with other Mtb genes known to be associated with dormancy and lipid metabolism.