Monoacylglycerol acyltransferase (MGAT) catalyzes the synthesis of diacylglycerol, the precursor of triacylglycerol biosynthesis and an important signaling molecule. Here, we describe the isolation and characterization of the peanut (Arachis hypogaea) MGAT gene. The soluble enzyme utilizes invariant histidine-62 and aspartate-67 residues of the acyltransferase motif for its MGAT activity. A sequence analysis revealed the presence of a hydrolase (GXSXG) motif, and enzyme assays revealed the presence of monoacylglycerol (MAG) and lysophosphatidylcholine (LPC) hydrolytic activities, indicating the bifunctional nature of the enzyme. The overexpression of the MGAT gene in yeast (Saccharomyces cerevisiae) caused an increase in triacylglycerol accumulation. Similar to the peanut MGAT, the Arabidopsis (Arabidopsis thaliana) homolog (At1g52760) also exhibited both acyltransferase and hydrolase activities. Interestingly, the yeast homolog lacks the conserved HX(4)D motif, and it is deficient in the acyltransferase function but exhibits MAG and LPC hydrolase activities. This study demonstrates the presence of a soluble MGAT/hydrolase in plants. The predicted three-dimensional homology modeling and substrate docking suggested the presence of two separate substrate (MAG and LPC)-binding sites in a single polypeptide. Our study describes a soluble bifunctional enzyme that has both MGAT and hydrolase functions.