Acyl-coenzyme A:monoacylglycerol acyltransferase 3 (MGAT3) is a member of the MGAT family of enzymes that catalyze the synthesis of diacylglycerol (DAG) from monoacylglycerol (MAG), a committed step in dietary fat absorption. Although named after the initial identification of its MGAT activity, MGAT3 shares higher sequence homology with acyl-coenzyme A:diacylglycerol acyltransferase 2 (DGAT2) than with other MGAT enzymes, suggesting that MGAT3 may also possess significant DGAT activity. This study compared the catalytic properties of MGAT3 with those of MGAT1 and MGAT2 enzymes using both MAG and DAG as substrates. Our results showed that in addition to the expected MGAT activity, the recombinant MGAT3 enzyme expressed in Sf-9 insect cells displayed a strong DGAT activity relative to that of MGAT1 and MGAT2 enzymes in the order MGAT3 > MGAT1 > MGAT2. In contrast, none of the three MGAT enzymes recognized biotinylated acyl-CoA or MAG as a substrate. Although MGAT3 possesses full DGAT activity, it differs from DGAT1 in catalytic properties and subcellular localization. The MGAT3 activity was sensitive to inhibition by the presence of 1% CHAPS, whereas DGAT1 activity was stimulated by the detergent. Consistent with high sequence homology with DGAT2, the MGAT3 enzyme demonstrated a similar subcellular distribution pattern to that of DGAT2, but not DGAT1, when expressed in COS-7 cells. Our data suggest that MGAT3 functions as a novel triacylglycerol (TAG) synthase that catalyzes efficiently the two consecutive acylation steps in TAG synthesis.