Diet-derived fatty acids (FAs) are essential sources of energy and fundamental structural components of cells. They also play important roles in the modulation of immune responses in health and disease. Saturated and unsaturated FAs influence the effector and regulatory functions of innate and adaptive immune cells by changing membrane composition and fluidity and by acting through specific receptors. Impaired balance of saturated/unsaturated FAs, as well as n-6/n-3 polyunsaturated FAs has significant consequences on immune system homeostasis, contributing to the development of many allergic, autoimmune, and metabolic diseases. In this paper, we discuss up-to-date knowledge and the clinical relevance of the influence of dietary FAs on the biology, homeostasis, and functions of epithelial cells, macrophages, dendritic cells, neutrophils, innate lymphoid cells, T cells and B cells. Additionally, we review the effects of dietary FAs on the pathogenesis of many diseases, including asthma, allergic rhinitis, food allergy, atopic dermatitis, rheumatoid arthritis, multiple sclerosis as well as type 1 and 2 diabetes.