More human lives have been lost to tuberculosis than to any other disease and despite the availability of effective short course chemotherapy (DOTS) as well as the Bacilli Calmette Guerin (BCG) vaccine, tuberculosis continues to claim more than a million lives annually. Mycobacterium tuberculosis (M. tuberculosis), the causative agent of tuberculosis, is one of the most successful and scientifically challenging pathogens of all time. However in the last two decades, the ability to perform molecular genetic analysis of M. tuberculosis has resulted in powerful new research tools, while the availability of the complete genome sequence has provided us with a wealth of new information and understanding of the biology of this major pathogen. One of the major challenges, however, is to analyze the properties and functions of those genes that are unique to M. tuberculosis genome. The identification and characterization of such genes which impart various survival strategies employed by M. tuberculosis for successful infection will be of particular significance. One of the important outcomes from the complete genome sequence of M. tuberculosis is the discovery of two multigene families designated PE (99 members) and PPE (69 members) named respectively for the Pro-Glu (PE) and Pro-Pro-Glu (PPE) motifs near the N-terminus of their gene products. In addition to these motifs, proteins of the PE family possess highly homologous N-terminal domains of approximately 100 amino acids (PE domain), whereas the PPE proteins possess a highly homologous N-terminal domain of about 180 amino acids (PPE domain). Although the PE and PPE families of mycobacterial proteins are the focus of intense research, no precise function has so far been unraveled for any member of these families. The current study focuses on Rv3097c gene of M. tuberculosis, a PE family gene that was bioinformatically predicted to be a triacylglycerol hydrolase (lipase). In order to decipher the role of the PE domain, we have carried out functional characterization of the Rv3097c gene (also named lipY) as it was, initially, the only known PE protein for which an enzymatic function (i.e. lipase activity) had been predicted. Further, to understand the function of PE family proteins, an important question that needs to be answered is; whether the PE domain of different PE family proteins has similar or different functions? In this context, our studies were focused on studying the functional role of the PE domain in LipY, as outlined below. In general, the in vivo function and subcellular localization of any protein are integrally connected. PE domain has been reported to be essential for cell wall localization of PE_PGRS33, another PE family protein. Therefore we investigated the subcellular localization of LipY and the influence of the PE domain on subcellular localization of LipY. LipY and a truncated form of LipY lacking the PE domain [LipY(ΔPE)] were expressed in mycobacteria(M. smegmatis and M. bovis BCG). Subcellular fractionation and western blot demonstrated that both LipY and LipY(ΔPE) were predominantly detected in the cell wall fraction, indicating that LipY is localized to the cell wall and the PE domain of LipY was not required for translocation of LipY to cell wall. This result is in contrast to the findings for PE_PGRS33, where the absence of the PE domain caused the cell wall associated protein to localize to the cytosol. Furthermore, immuno-electron microscopy of M. bovis BCG expressing LipY(ΔPE) clearly showed a cell surface localization of LipY(ΔPE). These results signify that the function of the PE domain might not always be similar amongst different PE family proteins. In order to further investigate the role of the PE domain in LipY, we studied the lipase activity of LipY and the influence of the PE domain on lipase activity. Bioinformatic analysis confirmed the presence of a lipase domain containing a GDSAG active site motif characteristic of lipases. Overexpression of LipY in mycobacteria (M. smegmatis and M. bovis BCG) resulted in a significant reduction in the pool of triacylglycerols (TAG), consistent with the lipase activity of this enzyme. Interestingly, this reduction was more pronounced in mycobacteria overexpressing LipY(ΔPE), suggesting that the presence of the PE domain diminishes the lipase activity of LipY. In vitro lipase assays also confirmed LipY(ΔPE) as a more efficient lipase compared to the wild-type LipY. Together these results suggest that the PE domain of LipY might be involved in the modulation of lipase activity. Surprisingly, M. marinum, another pathogenic mycobacteria, possesses a protein homologous to LipY, termed LipYmar, in which the PE domain is substituted by a PPE domain. The overexpression of LipYmar in M. smegmatis significantly reduced the TAG pool suggesting that it is a triacylglycerol hydrolase/lipase. Interestingly, similar to the removal of the PE domain of LipY, this reduction in the TAG pool was further pronounced when the PPE domain of LipYmar was removed. This suggests that PE and PPE domains might share similar functional roles in modulating the enzymatic activities of these lipase homologs. In order to assess the in vivo relevance of LipY expression during M. tuberculosis infection, we examined the humoral immune responses against LipY in sera derived from various clinical categories of tuberculosis patients. The presence of specific antibodies against any protein is suggestive of expression of the protein during infection and could potentially be used to differentiate between healthy individuals and infected patients (serodiagnosis of tuberculosis). The cell wall localization suggested that LipY may be accessible for interaction with the host immune system during infection. Moreover, humoral responses were observed against LipY in mice immunized with DNA constructs expressing LipY, indicating that LipY could be an effective B-cell antigen. Accordingly, a strong humoral response against LipY and LipY(ΔPE) was observed in tuberculosis patients compared to healthy individuals, suggesting that LipY is expressed during infection by clinical strains of M. tuberculosis and might represent an immunodominant antigen of M. tuberculosis with potential use in serodiagnosis of tuberculosis.