Lipid droplet (LD) fusion plays a key role in cellular fat storage. How the phospholipid monolayer membrane of LD functions in fusion, however, is poorly understood. In Caenorhabditis elegans, loss of cytochrome P450 protein CYP-37A1 causes de-repression of nuclear receptor DAF-12, promoting thermosensitive LD fusion. Here, we report that in cyp-37A1 mutants, DAF-12 up-regulates the transcription and LD localization of seven fatty acid desaturases (FAT-1 to FAT-7) and a lysophosphatidylcholine acyltransferase 3 (LPCAT3) homolog MBOA-6. LD-targeting of these enzymes increases phosphatidylcholine (PC) containing ω-3 C20 polyunsaturated fatty acids, which are essential for thermosensitive fusion. ω-3 C20-PC increase LD membrane fluidity, as does high ambient temperature. Lowering LD membrane fluidity by a chemical membrane rigidifier attenuates thermosensitive fusion; ectopic targeting of ω3 desaturase FAT-1 or MBOA-6 to LDs increases fusion kinetics and thermosensitivity. Furthermore, human LPCAT3 localizes to LDs, positively regulates LD size in human cells and facilitates thermosensitive fusion in C. elegans. These results demonstrate that DAF-12 signaling regulates compartmentalized membrane remodeling and fluidization to facilitate conserved thermosensitive LD fusion.