At least during the first 6 months after birth, the nutrition of infants should ideally consist of human milk which provides 40-60 % of energy from lipids. Beyond energy, human milk also delivers lipids with a specific functionality, such as essential fatty acids (FA), phospholipids, and cholesterol. Healthy development, especially of the nervous and digestive systems, depends fundamentally on these. Epidemiological data suggest that human milk provides unique health benefits during early infancy that extend to long-lasting benefits. Preclinical findings show that qualitative changes in dietary lipids, i.e., lipid structure and FA composition, during early life may contribute to the reported long-term effects. Little is known in this respect about the development of digestive function and the digestion and absorption of lipids by the newborn. This review gives a detailed overview of the distinct functionalities that dietary lipids from human milk and infant formula provide and the profound differences in the physiology and biochemistry of lipid digestion between infants and adults. Fundamental mechanisms of infant lipid digestion can, however, almost exclusively be elucidated in vitro. Experimental approaches and their challenges are reviewed in depth. © 2012 The Author(s).