Three-point Dixon techniques achieve good lipid-water separation by estimating the phase due to field inhomogeneities. Recently it was demonstrated that the combination of an iterative algorithm (iterative decomposition of water and fat with echo asymmetry and least-squares estimation (IDEAL)) with a fast spin-echo (FSE) three-point Dixon method yielded robust lipid-water decomposition. As an alternative to FSE, the gradient- and spin-echo (GRASE) technique has been developed for efficient data collection. In this work we present a method for lipid-water separation by combining IDEAL with the GRASE technique. An approach to correct for errors in the lipid-water decomposition caused by phase distortions due to the switching of the readout gradient polarities inherent to GRASE is presented. The IDEAL-GRASE technique is demonstrated in phantoms and in vivo for various applications, including pelvic, musculoskeletal, and (breath-hold) cardiac imaging. Magn Reson Med 57:1047–1057, 2007. © 2007 Wiley-Liss, Inc.