Lipids exhibit important functional properties in bread making, although they are present in lower levels than starch or protein. They originate from flour, in which they are endogenously present, or from added shortening and/or surfactants. This review discusses lipid sources and their interactions during the entire process of bread making from dough mixing to fermentation, proofing, baking and the stored product. The focus is on lipid interactions with starch and gluten proteins, their role in gas cell stabilisation and their impact on bread loaf volume, crumb structure and crumb firming. Widely accepted views on lipid functionality, although often opposing, are presented and critically discussed.