Adipose triglyceride lipase (ATGL) was recently identified as an important triacylglycerol (TG) hydrolase promoting the catabolism of stored fat in adipose and nonadipose tissues. We now demonstrate that efficient ATGL enzyme activity requires activation by CGI-58. Mutations in the human CGI-58 gene are associated with Chanarin-Dorfman Syndrome (CDS), a rare genetic disease where TG accumulates excessively in multiple tissues. CGI-58 interacts with ATGL, stimulating its TG hydrolase activity up to 20-fold. Alleles of CGI-58 carrying point mutations associated with CDS fail to activate ATGL. Moreover, CGI-58/ATGL coexpression attenuates lipid accumulation in COS-7 cells. Antisense RNA-mediated reduction of CGI-58 expression in 3T3-L1 adipocytes inhibits TG mobilization. Finally, expression of functional CGI-58 in CDS fibroblasts restores lipolysis and reverses the abnormal TG accumulation typical for CDS. These data establish an important biochemical function for CGI-58 in the lipolytic degradation of fat, implicating this lipolysis activator in the pathogenesis of CDS.