Milkfish grown on two natural foods were examined to determine the distribution pattern of the digestive lipases along the digestive tract and to identify the optimum condition for lipase activity. One food consisted of a biological complex of unicellular algae and diatoms (Food A) and the other consisted of fibrous filamentous green algae, predominantly Chaetomorpha brachygona (Food B). The major sites of lipase secretion in milkfish digestive tract were the intestines, pancreas and pyloric caeca. Lipase activity was somewhat higher for fish grown on Food A than those grown on Food B. Intestinal lipase activity was observed to be maximal at 45°C and at pH 6.8 and 8.0. Activity of pancreatic lipase was observed to be maximal at 50°C and at pH 6.4 and 8.6. The detection of two well-defined pH optima, one at slightly acidic and the other at alkaline pH for both the intestinal and pancreatic lipases suggests a physiological versatility for lipid digestion in milkfish.