A pilot plant process simulation of dry and wet hydrothermic treatment of oats was performed in order to study the effect of the different process steps on lipase activity and the storage stability of the fat phase. A comparison was made between oats that had passed through a dry kiln treatment prior to steam preparation and oats that had only been steam-treated. Samples were taken after step in the process as well as during storage at +30°C for up to 44 weeks. The lipase activity disappeared after steam preparation, but not after the dry-heat treatment used in this process experiment. The fat phase was analysed with regard to the amount of free fatty acids (FFA) and the content of individual fatty acids. The initial content of FFA was about 8-9%. The hydrolysis of fat, giving an increase in the amount of FFA, took place in all the stored samples, but was much more pronounced in the samples that had not undergone dry- heat treatment. In the dry-heat-treated samples, the FFA concentration reached a maximum at 13-15% after 16 weeks of storage. In the samples that had not been dry- heat-treated, the FFA reached over 30% in whole oat grains after 16 weeks of storage and continued to increased to over 40% after 30 weeks of storage. In the flour the FFA concentration was lower than in whole grains. Unexpectedly, lipolysis in this case was more pronounced in the whole kernels than in the flour samples. Lipolysis was not related to the measured remaining lipase activity. Head-space analyses of hexanal indicated that the formation of volatile lipid oxidation products was dependent on the process design, but the hexanal concentration was not related to the amount of FFA.