Monoacylglycerol acyltransferase 1 (MGAT) was identified as a microsomal enzyme that catalyzes the synthesis of diacylglycerol (DAG) and triacylglycerol (TAG), but the subcellular localization and catalytic function domain of this enzyme is poorly understood. In this report, we identify that murine MGAT1 localizes to the endoplasmic reticulum (ER) with basal condition, whereas, under conditions of enriching fatty acids, MGAT1 also co-localize to the lipid droplets (LD), contributing TAG synthesis and LD expansion. For the enzyme activity, both N-terminal transmembrane domain and catalytic HPHG motif are required. We also show that transmembrane domain of MGAT1 consists of two hydrophobic regions in N-terminus, and the consensus sequence FLXLXXXn, a putative neutral lipid-binding domain, exists in the first transmembrane domain. Finally, MGAT1 interacts with DGAT2, which serves synergistic increase in TAG biosynthesis and LD expansion, leading to enhance of lipid accumulation in liver and fat.