In this study, we examined the effect of different dietary inclusion levels of soy lecithin on growth, feed utilization, digestive enzyme activity, whole body fatty acid profile, body deformity and survival of milkfish (Chanos chanos) larvae, through a six-week feeding experiment. During the trial, five isonitrogenous and isoenergetic (~580 g kg−1 protein, 120 g kg−1 lipid and 20.5 MJ kg−1) practical larval diets with different levels of soy lecithin (0, 17.5, 35, 52.5 and 70 g Kg−1 in place of fish oil) were fed to triplicate groups of 18 days post-hatch milkfish larvae, three times a day, to visual satiation. At the end of the trial, larvae fed SL52.5 diet showed significantly higher final mean body weight (0.81 g), weight gain and specific growth rate, as compared to the other dietary groups. Feed intake was found to increase (0.74–1.54) linearly with increasing inclusion of soy lecithin. Corresponding to growth estimates, SL52.5 group had low FCR (2.37) and higher intestinal lipase activity than the rest. Likewise, the highest larval survival rate was recorded in SL52.5 and SL70. Protein efficiency (PER) was high in SL35, followed by SL52.5 group. The percentage of deformed larvae decreased with higher dietary phospholipid content, albeit with no statistically significant difference. The fatty acid composition of milkfish larvae was apparently independent of the dietary fatty acid content, with no significant dietary correlation. Overall, the results of the present study ascertained the beneficial role of dietary phospholipids in milkfish larval nutrition, and using second-order polynomial regression analysis, 59.6 g kg−1 soy lecithin was found to be the optimal inclusion level in milkfish larval feeds.