Lipid storage droplet protein 5 (LSDP5) is a lipid droplet-associated protein of the PAT (perilipin, adipophilin, and TIP47) family that is expressed in the liver in a peroxisome proliferator-activated receptor alpha (PPARα)-dependent manner; however, its exact function has not been elucidated. We noticed that LSDP5 was localized to the surface of lipid droplets in hepatocytes. Overexpression of LSDP5 enhanced lipid accumulation in the hepatic cell line AML12 and in primary hepatocytes. Knock-down of LSDP5 significantly decreased the triglyceride content of lipid droplets, stimulated lipolysis, and modestly increased the mitochondrial content and level of fatty-acid β-oxidation in the mitochondria. The expression of PPARα was increased in LSDP5-deficient cells and required for the increase in the level of fatty acid β-oxidation in LSDP5-deficient cells. Using serial deletions of LSDP5, we determined that the lipid droplet-targeting domain and the domain directing lipid droplet clustering overlapped and were localized to the 188 amino acid residues at the N-terminus of LSDP5. Our findings suggest that LSDP5, a novel lipid droplet protein, may contribute to triglyceride accumulation by negatively regulating lipolysis and fatty acid oxidation in hepatocytes.