The concept of lipase interfacial activation stems from the finding that the catalytic activity of most lipases depends on the aggregation state of their substrates. It is thought that activation involves the unmasking and structuring of the enzyme's active site through conformational changes requiring the presence of oil-in-water droplets. Here, we present the neutron structure of the activated lipase-colipase-micelle complex as determined using the D2O/H2O contrast variation low resolution diffraction method. In the ternary complex, the disk-shaped micelle interacts extensively with the concave face of colipase and the distal tip of the C-terminal domain of lipase. Since the micelle- and substrate-binding sites concern different regions of the protein complex, we conclude that lipase activation is not interfacial but occurs in the aqueous phase and is mediated by colipase and a micelle.