Researches related with the application of functional lipids such as polyunsaturated fatty acids (PUFAs) have been conducted in various fields with a view to health and dietary requirements. Novel rich sources other than known natural sources such as plant seeds and fish oils are required for increasing demands of PUFAs. The filamentous fungus Mortierella alpina 1S-4 produces triacylglycerols rich in arachidonic acid, i.e., ones reaching 20 g/l in concentration and containing 30-70% arachidonic acid as total fatty acids. Various mutants derived from M. alpine 1S-4 have led to the production of oils containing various PUFAs. Molecular breeding of M. alpine strains by means of manipulation of the genes involved in PUFA biosynthesis facilitates improvement of PUFA productivity and elucidation of the functions of their enzymes. This review describes practical PUFA production through mutant breeding, functional analyses of the genes of the enzymes involved in PUFA biosynthesis, and recent advances in unique PUFA production through molecular breeding. (C) 2013, The Society for Biotechnology, Japan. All rights reserved.