Phosphatidylinositol (PI) is a component of membrane phospholipids, and it functions both as a signaling molecule and as a compartment-specific localization signal in the form of polyphosphoinositides. Arachidonic acid (AA) is the predominant fatty acid in the sn-2 position of PI in mammals. LysoPI acyltransferase (LPIAT) is thought to catalyze formation of AA-containing PI; however, the gene that encodes this enzyme has not yet been identified. In this study, we established a screening system to identify genes required for use of exogenous polyunsaturated fatty acids (PUFAs) in Caenorhabditis elegans. In C. elegans, eicosapentaenoic acid (EPA) instead of AA is the predominant fatty acid in PI. We showed that an uncharacterized gene, which we named mboa-7, is required for incorporation of PUFAs into PI. Incorporation of exogenous PUFA into PI of the living worms and LPIAT activity in the microsomes were greatly reduced in mboa-7 mutants. Furthermore, the membrane fractions of transgenic worms expressing recombinant MBOA-7 and its human homologue exhibited remarkably increased LPIAT activity. mboa-7 encodes a member of the membrane-bound O-acyltransferase family, suggesting that mboa-7 is LPIAT. Finally, mboa-7 mutants had significantly lower EPA levels in PI, and they exhibited larval arrest and egg-laying defects.