Every cell produces thousands of distinct lipid species, but insight into how lipid chemical diversity contributes to biological signaling is lacking, particularly because of a scarcity of methods for quantitatively studying lipid function in living cells. Using the example of diacylglycerols, prominent second messengers, we here investigate whether lipid chemical diversity can provide a basis for cellular signal specification. We generated photo-caged lipid probes, which allow acute manipulation of distinct diacylglycerol species in the plasma membrane. Combining uncaging experiments with mathematical modeling, we were able to determine binding constants for diacylglycerol–protein interactions, and kinetic parameters for diacylglycerol transbilayer movement and turnover in quantitative live-cell experiments. Strikingly, we find that affinities and kinetics vary by orders of magnitude due to diacylglycerol side-chain composition. These differences are sufficient to explain differential recruitment of diacylglycerol binding proteins and, thus, differing downstream phosphorylation patterns. Our approach represents a generally applicable method for elucidating the biological function of single lipid species on subcellular scales in quantitative live-cell experiments.