Cytosolic long-chain fatty acid binding proteins (FABPs) are found in tissues that metabolize fatty acids. Like most lipid binding proteins, their specific functions remain unclear. Two classes have been described. Membrane-active FABPs interact directly with membranes during exchange of fatty acids between the protein binding site and the membrane, while membrane-inactive FABPs bind only to fatty acids that are already in aqueous solution. Despite these binding proteins, most fatty acids in cell cytoplasm appear to be bound to membranes. This paper reviews data suggesting that FABPs catalyze transfer of fatty acids between intracellular membranes, often across considerable intracellular distances. This process occurs in three distinct steps: dissociation of the fatty acid from a 'donor' membrane, diffusion of the fatty acid across the intervening water layer, and binding to an 'acceptor' membrane. Membrane-active FABPs catalyze dissociation of the fatty acid from the donor membrane and binding to the acceptor membrane, while membrane-inactive FABPs catalyze diffusion of fatty acids across the aqueous cytosol. Thus, FABPs catalyze all three steps in intracellular transport. A simple quantitative model has been developed that predicts the rate of intracellular transport as a function of the concentration, affinity and diffusional mobility of the binding protein. Different FABPs may have evolved to match the specific transport requirements of the cell type within which they are found.