The biosynthesis of yeast phosphatidylglycerol (PG) takes place in the inner mitochondrial membrane. Outside mitochondria, the abundance of PG is low. Here, we present evidence that the subcellular distribution of PG is maintained by the locally controlled enzymatic activity of the PG-specific phospholipase, Pgc1. A fluorescently labeled Pgc1 protein accumulates on the surface of lipid droplets (LD). We show, however, that LD are not only dispensable for Pgc1-mediated PG degradation, but do not even host any phospholipase activity of Pgc1. Our in vitro assays document the capability of LD-accumulated Pgc1 to degrade PG upon entry to the membranes of the endoplasmic reticulum, mitochondria and even of artificial phospholipid vesicles. Fluorescence recovery after photobleaching analysis confirms the continuous exchange of GFP-Pgc1 within the individual LD in situ, suggesting that a steady-state equilibrium exists between LD and membranes to regulate the immediate phospholipase activity of Pgc1. In this model, LD serve as a storage place and shelter Pgc1, preventing its untimely degradation, while both phospholipase activity and degradation of the enzyme occur in the membranes.