Microsomal preparations from retinal pigment epithelium carry out phosphatidylcholine synthesis upon incubation with 1-palmitoyllysophosphatidylcholine and fatty acyl-CoA. Phosphatidylcholine synthesized in situ in this manner is an acyl donor for retinyl ester synthesis, demonstrating the existence of lecithin:retinol acyltransferase. Although acyl transfer to retinol is from the 1-position of phosphatidylcholine, the fatty acid in the 2-position is important in substrate recognition. The finding of this novel enzyme activity in retinal pigment epithelial microsomes suggests that phosphatidylcholine is the endogenous acyl donor in CoA-independent retinol esterification observed in these preparations.