Lipoprotein lipase (LPL) was obtained from rat postheparin plasma by chromatographies on heparin-Sepharose and hydroxyapatite. The enzyme was associated with fatty acid ethyl ester synthase (FAEE synthase) as judged by their co-elution profiles and identical profiles of inhibition by diisopropyl fluorophosphate. Only one polypeptide of molecular weight 57,000 in purified LPL fraction was labeled by affinity labeling with [3H]-diisopropyl fluorophosphate. The FAEE synthase activity of LPL was not affected by addition of apolipoprotein C-II. Digestion of the enzyme with trypsin resulted in almost complete loss of the triolein-hydrolyzing activity without change in FAEE synthase activity. The tributyrin-hydrolyzing activity of LPL was also not affected by addition of apolipoprotein C-II or trypsin digestion. On addition at progressively higher concentrations, bovine serum albumin increased FAEE synthesis to a maximum at 2 mg/ml and at higher concentrations inhibited its activity. On incubation of purified LPL with chylomicrons in an ethanol/water mixture, FAEE was formed in the presence of a high concentration of bovine serum albumin. The specific activity of FAEE synthesis from chylomicrons was about 65 times that from oleic acid. Triolein/gum arabic emulsion was used for identification of reaction products. We propose the following mechanism of FAEE formation from chylomicrons by LPL. The enzyme attacks chylomicrons forming an acyl-enzyme intermediate, and during the deacylation process, ethanol binds to fatty acids as an acceptor. These results suggest that LPL contributes to nonoxidative ethanol metabolism (FAEE formation) through degradation of triglyceride-rich lipoproteins such as chylomicrons.