Abstract Researchers have long endeavored to produce modified fatty acids in easily managed crop plants where they are not natively found. An important step toward this goal has been the biosynthesis of these valuable products in model oilseeds. The successful production of such fatty acids has revealed barriers to the broad application of this technology, including low seed oil and low proportion of the introduced fatty acid and reduced seed vigor. Here, we analyze the impact of producing hydroxy-fatty acids on seedling development. We show that germinating seeds of a hydroxy-fatty acid-accumulating Arabidopsis (Arabidopsis thaliana) line produce chlorotic cotyledons and suffer reduced photosynthetic capacity. These seedlings retain hydroxy-fatty acids in polar lipids, including chloroplast lipids, and exhibit decreased fatty acid synthesis. Triacylglycerol mobilization in seedling development also is reduced, especially for lipids that include hydroxy-fatty acid moieties. These developmental defects are ameliorated by increased flux of hydroxy-fatty acids into seed triacylglycerol created through the expression of either castor (Ricinus communis) acyltransferase enzyme ACYL-COA:DIACYLGLYCEROL ACYLTRANSFERASE2 or PHOSPHOLIPID:DIACYLGLYCEROL ACYLTRANSFERASE1A. Such expression increases both the level of total stored triacylglycerol and the rate at which it is mobilized, fueling fatty acid synthesis and restoring photosynthetic capacity. Our results suggest that further improvements in seedling development may require the specific mobilization of triacylglycerol-containing hydroxy-fatty acids. Understanding the defects in early development caused by the accumulation of modified fatty acids and providing mechanisms to circumvent these defects are vital steps in the development of tailored oil crops.