Functional lipids, primarily derived through the modification of natural lipids by various processes, are widely acknowledged for their potential to impart health benefits. In contrast to chemical methods for lipid modification, enzymatic catalysis offers distinct advantages, including high selectivity, mild operating conditions, and reduced byproduct formation. Nevertheless, enzymes face challenges in industrial applications, such as low activity, stability, and undesired selectivity. To address these challenges, protein engineering techniques have been implemented to enhance enzyme performance in functional lipid synthesis. This article aims to review recent advances in protein engineering, encompassing approaches from directed evolution to rational design, with the goal of improving the properties of lipid-modifying enzymes. Furthermore, the article explores the future prospects and challenges associated with enzyme-catalyzed functional lipid synthesis.