Triacylglycerol (TAG) is important to mycobacteria both as cell envelope component and energy reservoir. Mycobacterium tuberculosis (Mtb) genome encodes at least 15 putative TAG synthase (tgs)s. We report that one of these genes, Rv3371, specific to pathogenic mycobacteria, when expressed in M. smegmatis leads to modifications in colony morphotype, bacterial architecture, cell surface properties and elevated TAG levels. Rv3371 was found to largely localize in the cell membrane. The Rv3371 promoter is minimally active during exponential growth in vitro, however, is up-regulated under stationary phase, hypoxia, nutrient starvation, nitrosative stress, low iron, in IFN-γ activated macrophages and infected mice. The low iron-induced expression of Rv3371 is likely due to the de-repression by Rv1404, which is probably activated by ideR. An Rv3371 deletion mutant of Mtb showed impaired non-replicating persistence in vitro and altered sensitivity to anti-mycobacterial drugs. In low iron medium, the Rv3371 deletion mutant showed reduced formation of TAG containing extracellular vesicles. Therefore Rv3371 is likely involved in Mtb growth arrest and cell wall alterations during persistence.