Path of a small hydrophobic molecule through the aqueous cytoplasma is not linear. Partition may favor membrane binding by several orders of magnitude : thus significant membrane association will markedly decrease the cytosolic transport rate. The presence of high concentration of soluble binding proteins for these hydrophobic molecules would compete with membrane association and thereby increase transport rate. For long chain fatty acid molecules, a family of cytosolic binding proteins collectively known as the fatty acid binding proteins(FABP), are thought to act as intracellular transport proteins. This paper examines the mechanism of transfer of fluorescent antyroyloxy-labeled fatty acids(AOFA) from purified FABPs to phosholipid membranes. With the exception of the liver FABP, AOFA is transferred from FABP by collisional interaction of the protein with a acceptor membrane. The rate of transfer increased markedly when membranes contain anionic phospholipids. This suggests that positively charged residues on the surface of the FABP may interact with the membranes. Neutralization of the surface lysine residues of adipocyte FABP decreased fatty acid transfer rate, and transfer was found to proceed via aqueous diffusion rather than collisional interaction. Site specific mutagenesis has further shown that the helix-turn-helix domain of the FABP is critical for interaction with anionic acceptor membranes. Thus cytosolic FABP may function in intracellular transport of fatty acid to decrease their membranes association as well as to target fatty acid to specific subcellular sites of utilization.