The yeast Yarrowia lipolytica has developed very efficient mechanisms for breaking down and using hydrophobic substrates. It is considered an oleaginous yeast, based on its ability to accumulate large amounts of lipids. Completion of the sequencing of the Y. lipolytica genome and the existence of suitable tools for genetic manipulation have made it possible to use the metabolic function of this species for biotechnological applications. In this review, we describe the coordinated pathways of lipid metabolism, storage and mobilization in this yeast, focusing in particular on the roles and regulation of the various enzymes and organelles involved in these processes. The physiological responses of Y. lipolytica to hydrophobic substrates include surface-mediated and direct interfacial transport processes, the production of biosurfactants, hydrophobization of the cytoplasmic membrane and the formation of protrusions. We also discuss culture conditions, including the mode of culture control and the culture medium, as these conditions can be modified to enhance the accumulation of lipids with a specific composition and to identify links between various biological processes occurring in the cells of this yeast. Examples are presented demonstrating the potential use of Y. lipolytica in fatty-acid bioconversion, substrate valorization and single-cell oil production. Finally, this review also discusses recent progress in our understanding of the metabolic fate of hydrophobic compounds within the cell: their terminal oxidation, further degradation or accumulation in the form of intracellular lipid bodies.