Glycerolipids of the marine diatom Thalassiosira pseudonana are enriched particularly with eicosapentaenoic acid (EPA), and also with an appreciable level of docosahexaenoic acid (DHA). The present study describes the functional characterization of a type 2 diacylglycerol acyltransferase (DGAT2, EC 22.214.171.124) from T. pseudonana, designated TpDGAT2, which catalyzes the final step of triacylglycerol (TAG) synthesis. Heterologous expression of this gene restored TAG formation in a yeast mutant devoid of TAG biosynthesis. TpDGAT2 was also shown to exert a large impact on the fatty acid profile of TAG. Its expression caused a 10–12% increase of 18:1 and a concomitant decrease of 16:0 relative to that of AtDGAT1(Arabidopsis thaliana). Furthermore, in the presence of the very-long-chain polyunsaturated fatty acids (VLCPUFA) EPA and DHA, TAG formed by TpDGAT2 displayed three- to six-fold increases in the percentage of VLCPUFA relative to that of AtDGAT1 even though TpDGAT2 conferred much lower TAG-synthetic activities than Arabidopsis DGAT1. Strikingly, when fed DHA, the yeast mutant expressing TpDGAT2 incorporated high levels of EPA and DHA isomers derived from DHA β-oxidation. In contrast, no such phenomenon occurred in the cells expressing AtDGAT1. These results suggested that, in addition to the role in breaking down storage lipids, yeast peroxisomes also contribute to lipid synthesis by recycling acyl-CoAs when a fatty acyl assembly system is available to capture and utilize the fatty acyl pools generated via β-oxidation. Our study hence illustrated a case where the efficiency and substrate preference of an acyltransferase can elicit far reaching metabolic adjustments that affect TAG composition.