Platelet-activating factor (PAF) is a potent proinflammatory lipid mediator eliciting a variety of cellular functions. Lipid mediators, including PAF are produced from membrane phospholipids by enzymatic cascades. Although a G protein-coupled PAF receptor and degradation enzymes have been cloned and characterized, the PAF biosynthetic enzyme, aceyl-CoA:lyso-PAF acetyltransferase, has not been identified. Here, we cloned lyso-PAF acetyltransferase, which is critical in stimulus-dependent formation of PAF. The enzyme is a 60-kDa microsomal protein with three putative membrane-spanning domains. The enzyme was induced by bacterial endotoxin (lipopolysaccharide), which was suppressed by dexamethasone treatment. Surprisingly, the enzyme catalyzed not only biosynthesis of PAF from lyso-PAF but also incorporation of arachidonoyl-CoA to produce PAF precursor membrane glycerophospholipids (lysophosphatidylcholine acyltransferase activity). Under resting conditions, the enzyme prefers arachidonoyl-CoA and contributes to membrane biogenesis. Upon acute inflammatory stimulation with lipopolysaccharide, the activated enzyme utilizes acetyl-CoA more efficiently and produces PAF. Thus, our findings provide a novel concept that a single enzyme catalyzes membrane biogenesis of inflammatory cells while producing a prophlogistic mediator in response to external stimuli.