Membrane fusion plays a lead role in the transport of vesicles, neurotransmission, mitochondrial dynamics, and viral infection. There are fusion proteins that catalyze and regulate the fusion. Interestingly, various types of fusion proteins are present in nature and they possess diverse mechanisms of action. We have highlighted the importance of the functional domains of intracellular heterotypic fusion, homotypic endoplasmic reticulum (ER), homotypic mitochondrial, and type-I viral fusion. During intracellular heterotypic fusion, the SNAREs and four-helix bundle formation are prevalent. Type-I viral fusion is controlled by the membrane destabilizing properties of fusion peptide and six-helix bundle formation. The ER/mitochondrial homotypic fusion is controlled by GTPase activity and the membrane destabilization properties of the amphipathic helix(s). Although the mechanism of action of these fusion proteins is diverse, they have some similarities. In all cases, the lipid composition of the membrane greatly affects membrane fusion. Next, examples of lipidation of the fusion proteins were discussed. We suggest that the fatty acyl hydrophobic tail not only acts as an anchor but may also modulate the energetics of membrane fusion intermediates. Lipidation is also important to design more effective peptide-based fusion inhibitors. Together, we have shown that membrane lipid composition and lipidation are important to modulate membrane fusion.