The morphogenetic behavior of a tropical marine Yarrowia lipolytica strain on hydrophobic substrates was studied. Media containing coconut oil or palm kernel oil (rich in lauric and myristic acids) prepared in distilled water or seawater at a neutral pH supported 95% of the cells to undergo a transition from the yeast form to the mycelium form. With potassium laurate, 51 % of the cells were in the mycelium form, whereas with myristate, 32% were in the mycelium form. However, combinations of these two fatty acids in proportions that are present in coconut oil or palm kernel oil enhanced the mycelium formation to 65%. The culture also produced extracellular lipases during the morphogenetic change. The yeast cells were found to attach to the large droplets of the hydrophobic substrates during the transition, while the mycelia were associated with the aqueous phase. The alkane-grown yeast partitioned more efficiently in the hydrophobic phases when compared with the coconut oil-grown mycelia. A fatty acid analysis of the mycelial form revealed the presence of lauric acid in addition to the long-chain saturated and unsaturated fatty acids observed in the yeast form. The mycelia underwent a rapid transition to the yeast form with n-dodecane, a medium-chain aliphatic hydrocarbon. Thus, the fungus displayed a differential behavior towards the two types of saturated hydrophobic substrates.