Within tuberculous granulomas, a subpopulation of Mycobacterium tuberculosis resides inside foamy macrophages (FM) that contain abundant cytoplasmic lipid bodies (LB) filled with triacylglycerol (TAG). Upon fusion of LB with M. tuberculosis-containing phagosomes, TAG is hydrolyzed and reprocessed by the bacteria into their own lipids, which accumulate as intracytosolic lipid inclusions (ILI). This phenomenon is driven by many mycobacterial lipases, among which LipY participates in the hydrolysis of host and bacterial TAG. However, the functional contribution of LipY's PE domain to TAG hydrolysis remains unclear. Here, enzymatic studies were performed to compare the lipolytic activities of recombinant LipY and its truncated variant lacking the N-terminal PE domain, LipY(ΔPE). Complementarily, an FM model was used where bone marrow-derived mouse macrophages were infected with M. bovis BCG strains either overexpressing LipY or LipY(ΔPE) or carrying a lipY deletion mutation prior to being exposed to TAG-rich very-low-density lipoprotein (VLDL). Results indicate that truncation of the PE domain correlates with increased TAG hydrolase activity. Quantitative electron microscopy analyses showed that (i) in the presence of lipase inhibitors, large ILI (ILI+3) were not formed because of an absence of LB due to inhibition of VLDL-TAG hydrolysis or inhibition of LB-neutral lipid hydrolysis by mycobacterial lipases, (ii) ILI+3 profiles in the strain overexpressing LipY(ΔPE) were reduced, and (iii) the number of ILI+3 profiles in the ΔlipY mutant was reduced by 50%. Overall, these results delineate the role of LipY and its PE domain in host and mycobacterial lipid consumption and show that additional mycobacterial lipases take part in these processes.