Lipid droplets (LDs) are the principal organelles of lipid storage. They consist of a hydrophobic core of storage lipids, surrounded by a phospholipid monolayer with proteins attached. While some of these proteins are essential to regulate cellular and organismic lipid metabolism, key questions concerning LD protein function, such as their targeting to LDs, are still unanswered. Intriguingly, some proteins are restricted to LD subsets by an as yet unknown mechanism. This finding makes LD targeting even more complex. Here, we characterize the Drosophila protein CG2254 which targets LD subsets in cultured cells and different larval Drosophila tissues, where the prevalence of LD subsets appears highly dynamic. We find that an amphipathic amino acid stretch mediates CG2254 LD localization. Additionally, we identified a juxtaposed sequence stretch limiting CG2254 localization to LD subsets. This sequence is sufficient to restrict a chimeric protein - consisting of the subset targeting sequence introduced to an otherwise pan LD localized protein sequence - to LD subsets. Based on its subcellular localization and annotated function, we suggest to rename CG2254 to Lipid droplet subset dehydrogenase 1 (Ldsdh1).