Effect of replacement of fat with 25, 50, 75 and 100% sesame oil (on fat basis); 50% sesame oil, hydrocolloids and emulsifiers on the rheological, microstructural, quality characteristics and fatty acid profile of cake was studied. Addition of increasing amount of sesame oil decreased viscosity, increased specific gravity of cake batter; decreased cake volume and overall quality score. Microstructure studies showed disrupted gluten matrix. Among the two different hydrocolloids [hydroxypropylmethylcellulose (HPMC) and xanthan] and emulsifiers [glycerol monostearate (GMS) and sodium stearoyl-2-lactylate (SSL)] tried, HPMC and SSL increased the batter viscosity, decreased the specific gravity, increased the volume and overall quality score. Use of combination of HPMC and SSL improved significantly the quality characteristics of cake with 50% sesame oil in such a way that the overall quality score was higher than that of the control cake with fat. The microstructure of cake crumb with 50% sesame oil and HPMC showed a smooth structure with less number of cavities and SSL showed a continuous protein matrix. On replacing the fat with 50% sesame oil, there was a decrease in saturated fatty acids and increase in unsaturated fatty acids, particularly linoleic acid. The fatty acid profile of cake with 50% sesame oil was better than the control cake as there was 2.4 times decrease in palmitic acid content and 5.9 times increase in essential fatty acids (EFA) content.