Eukaryotes store metabolic energy in form of neutral lipids, which are deposited within a dedicated organelle, termed lipid droplet (LD). While neutral lipids are synthesized by ER localized integral membrane proteins, the fate of these lipids after their synthesis and the mechanism resulting in their accumulation in LDs are not well understood. We have recently shown that LDs are functionally connected to the ER membrane allowing for a bidirectional and energy-independent transport of integral membrane proteins and possibly lipids between the two compartments during lipogenesis or lipolysis. To further characterize the nature of this connection, we investigated the topology of triacylglycerol (TAG) formation. Here we show that the active site residues of the TAG biosynthetic enzyme in yeast, Lro1, a homolog of the lecithin cholesterol acyltransferase (LCAT)-related proteins, are located within the ER luminal domain of the enzyme, suggesting that TAG formed by Lro1 is initially present in the ER luminal leaflets of the ER membrane. The topology of TAG formed by Lro1 thus contrasts that of the second TAG biosynthetic enzyme, Dga1, which has a cytosolic acyl-CoA binding domain and thus is likely to catalyze TAG formation in the cytosolic leaflet of the ER membrane. Since TAG formed by either Dga1 or Lro1 can be efficiently packed into LDs we conclude that neutral lipids from both the cytosolic as well as the luminal leaflets of the ER membrane can be concentrated and packed into LDs.