Abstract Triacylglycerols (TAGs) are the main storage lipids in photosynthetic organisms under stress. In the oleaginous alga Nannochloropsis oceanica, while multiple acyl CoA:diacylglycerol (DAG) acyltransferases (NoDGATs) are involved in TAG production, the role of the unique phospholipid:DAG acyltransferase (NoPDAT) remains unknown. Here, we performed a functional complementation assay in TAG-deficient yeast (Saccharomyces cerevisiae) and an in vitro assay to probe the acyltransferase activity of NoPDAT. Subcellular localization, overexpression, and knockdown (KD) experiments were also conducted to elucidate the role of NoPDAT in N. oceanica. NoPDAT, residing at the outermost plastid membrane, does not phylogenetically fall into the clades of algae or plants and uses phosphatidylethanolamine (PE) and phosphatidylglycerol with 16:0, 16:1, and 18:1 at position sn-2 as acyl-donors in vivo. NoPDAT KD, not triggering any compensatory mechanism via DGATs, led to an ∼30% decrease of TAG content, accompanied by a vast accumulation of PEs rich in 16:0, 16:1, and 18:1 fatty acids (referred to as “LU-PE”) that was positively associated with CO2 availability. We conclude that the NoPDAT pathway is parallel to and independent of the NoDGAT pathway for oil production. LU-PE can serve as an alternative carbon sink for photosynthetically assimilated carbon in N. oceanica when PDAT-mediated TAG biosynthesis is compromised or under stress in the presence of high CO2 levels.