We characterized the prey field and the lipid classes/fatty acids in the flesh of age 0 juvenile cod (Gadus morhua) during their late-summer/fall arrival and settlement into eelgrass (Zostera marina) in coastal Newfoundland. Examination of available prey demonstrated a high abundance of small zooplankton (Acartia, Microsetella and Oithona sp.) with no larger Calanus sp. prey. Breakpoint analysis showed significant changes in the accumulation of relative (mg g-1 wet weight) and absolute (μg fish-1) amounts of lipid with standard length at the time of settlement (˜60 mm standard length). Settling juvenile cod showed an alternate lipid utilization strategy where they catabolized phospholipids (PL) to a greater extent than triacylgylcerols (TAG). Polyunsaturated fatty acids (PUFA) content in cod flesh decreased as fish grew indicating that nearshore zooplankton quality was not optimal for PL formation. The dramatic reduction in cod PL was likely due to both catabolism of muscle and a lack of dietary PUFA suitable for PL synthesis. However, juvenile cod continued to grow, leading to decreased lipid stores and suggesting that cod settling into eelgrass are under intense selection pressure for growth prior to the onset of winter, possibly as a means of escaping gape-limited predation. These data contrast better-studied freshwater and estuarine systems in which lipid storage is critical for successful overwintering.