We have identified lipase-like genes from an Epiphyas postvittana larval midgut EST library. Of the 10 pancreatic lipase family genes, six appear to encode active lipases and four encode inactive lipases, based on the presence/absence of essential catalytic residues. The four gastric lipase family genes appear to encode active proteins. Phylogenetic analysis of 54 lepidopteran pancreatic lipase proteins resolved the clade into five groups of midgut origin and a sixth of non-midgut lipases. The inactive proteins formed two separate groups with highly conserved mutations. The lepidopteran midgut lipases formed a ninth subfamily of pancreatic lipases. Eighteen insect and human gastric lipases were analysed phylogenetically with only very weak support for any groupings. Gene expression was measured in the larval midgut following feeding on five artificial diets and on apple leaves. The artificial diets contained different levels of triacylglycerol, linoleic acid and cholesterol. Significant changes in gene expression (more than 100-fold for active pancreatic lipases) were observed. All the inactive lipases were also highly expressed. The gastric lipase genes were expressed at lower levels and suppressed in larvae feeding on leaves. Together, protein motif analysis and the gene expression data suggest that, in phytophagous lepidopteran larvae, the pancreatic lipases may function in vivo as galactolipases and phospholipases whereas the gastric lipases may function as triacylglycerol hydrolases.