Lipids play a crucial role in the entry and egress of viruses, regardless of whether they are naked or enveloped. Recent evidence shows that lipid involvement in viral infection goes much further. During replication, many viruses rearrange internal lipid membranes to create niches where they replicate and assemble. Because of the close connection between lipids and inflammation, the derangement of lipid metabolism also results in the production of inflammatory stimuli. Due to its pivotal function in the viral life cycle, lipid metabolism has become an area of intense research to understand how viruses seize lipids and to design antiviral drugs targeting lipid pathways. Palmitoylethanolamide (PEA) is a lipid-derived peroxisome proliferator-activated receptor-α (PPAR-α) agonist that also counteracts SARS-CoV-2 entry and its replication. Our work highlights for the first time the antiviral potency of PEA against SARS-CoV-2, exerting its activity by two different mechanisms. First, its binding to the SARS-CoV-2 S protein causes a drop in viral infection of ~70%. We show that this activity is specific for SARS-CoV-2, as it does not prevent infection by VSV or HSV-2, other enveloped viruses that use different glycoproteins and entry receptors to mediate their entry. Second, we show that in infected Huh-7 cells, treatment with PEA dismantles lipid droplets, preventing the usage of these vesicular bodies by SARS-CoV-2 as a source of energy and protection against innate cellular defenses. This is not surprising since PEA activates PPAR-α, a transcription factor that, once activated, generates a cascade of events that leads to the disruption of fatty acid droplets, thereby bringing about lipid droplet degradation through β-oxidation. In conclusion, the present work demonstrates a novel mechanism of action for PEA as a direct and indirect antiviral agent against SARS-CoV-2. This evidence reinforces the notion that treatment with this compound might significantly impact the course of COVID-19. Indeed, considering that the protective effects of PEA in COVID-19 are the current objectives of two clinical trials (NCT04619706 and NCT04568876) and given the relative lack of toxicity of PEA in humans, further preclinical and clinical tests will be needed to fully consider PEA as a promising adjuvant therapy in the current COVID-19 pandemic or against emerging RNA viruses that share the same route of replication as coronaviruses.