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.