AMP-activated kinase (AMPK) is a key regulator of many cellular mechanisms required for adjustment to various stresses induced by the changing environment. In C. elegans dauer larvae AMPK-null mutants expire prematurely due to hyperactive Adipose Triglyceride Lipase (ATGL-1) followed by rapid depletion of triglyceride stores. We found that the compromise of one of the three C. elegans orthologues of human cgi-58 significantly improves the survival of AMPK-deficient dauers. We also provide evidence that C. elegans CGI-58 acts as a co-activator of ATGL-1, while it also functions cooperatively to maintain regular lipid droplet structure. Surprisingly, we show that it also acts independently of ATGL-1 to restrict lipid droplet coalescence by altering the surface abundance and composition of long chain (C20) polyunsaturated fatty acids (PUFAs). Our data reveal a novel structural role of CGI-58 in maintaining lipid droplet homeostasis through its effects on droplet composition, morphology and lipid hydrolysis; a conserved function that may account for some of the ATGL-1-independent features unique to Chanarin-Dorfman Syndrome.