Emulsified liquid shortening compositions comprising dietary fiber gel, water and lipid, as well as a method for making the compositions, are disclosed. According to the present invention, dietary fiber gel can be subjected to micro-particulation by high shear via homogenization and combined with water and lipid. These ingredients are mixed to form a mixture. The mixture can then be subjected to colloid milling or other equivalent methods of emulsification, for example homogenization and ultrasonification treatment, in the presence of food grade emulsifiers, for example lecithin, and the emulsified mixture can be pasteurized. Functional foods such as high omega three and omega six oils and pure omega three and omega six fatty acids, medium chain triglyceride, beta carotene, calcium estearate, vitamin E, bioflavonoids, fagopyritrol, polyphenolic antioxidants of vegetable origin, lycopene, luteine and soluble fiber, for example Beta-Glucan derived from yeast, and other soluble fibers derived from grain, flax seed, and other vegetable and fruit fiber sources can be added prior to mixing for additional health benefits. The compositions are suitable for use in formulated foods to replace all or a portion of fats, oils and liquid shortenings normally contained in the foods to yield lower calorie, lower fat formulations of the foods. The emulsified compositions can also be used on a prorated basis as a vector for the introduction of dietary fiber gels into formulated foods to partially and totally replace other hydrocolloids normally found in formulated foods, thus providing an effective means to reduce production costs of formulated foods.