The aim of this paper is to provide explanations of how dietary phospholipid (PL) globally improves fish larval development, including growth and survival, digestive functions and skeletal development, and to propose optimal PL levels and sources in fish larval diets. Dietary incorporation of 8-12% PL related to dry matter (d.m.) promotes growth and enhanced survival in various species. Marine source PL, incorporating highly unsaturated fatty acids, was most efficient than soybean lecithin. This beneficial effect was explained by an enhancement in digestive functions, assessed by digestive enzyme activities and histomorphology. Nevertheless, 1.5-2.5% highly unsaturated fatty acids related to diet d.m. supplied by PL improved growth, survival and skeletal development, while 5% induced different skeletal deformities. The high incidence of deformities was associated with the down-regulation of genes involved in development, such as RXR alpha, RAR alpha, RAR beta and BMP-4, observed in the early stages in larvae fed a high highly unsaturated fatty acids level.