Objectives To elucidate the role ofFSH1(family of serine hydrolase) in lipid homeostasis. Results Proteins in various species containing alpha/beta hydrolase domain are known to be involved in lipid metabolism. In silico analysis of theFSH1gene inSaccharomyces cerevisiaerevealed the presence of alpha/beta hydrolase domain (ABHD) and a lipase motif (GXSXG), however its function in lipid metabolism remained elusive. The overexpression ofFSH1in WT andfsh1 Delta cells showed a significant reduction in the cellular phospholipid levels and an increase in the triacylglycerol levels and lipid droplet (LD) number. Furthermore, the purified recombinant protein Fsh1p was identified as a lysophospholipase that specifically acts on lysophosphatidylserine (LPS) and impacts the lipid homeostasis inS. cerevisiae. Conclusions These results depicted that Fsh1p has a role on lipid homeostasis and is a lysophospholipase that hydrolyzes lysophosphatidylserine (LPS).