A thermostable lipase was partially purified from the culture supernatant of a thermophilic Bacillus sp. The enzyme is optimally active at 60ºC and pH 8.0. The enzyme showed enhancement in activity in presence of benzene or hexane (30% v/v each). The activity (assayed by determining the release of pNP from pNP laurate) was stimulated up to 60% of these solvents in enzyme reaction mixture. The catalytic properties of this thermostable enzyme can be further improved via the use of different immobilization techniques and reaction conditions. Enzyme was immobilized on different solid supports and their enzyme activity and stability was compared. The enzyme was adsorbed on silica and HP-20 beads followed by cross-linking with gluteraldehyde on HP-20, which improved the thermostability of enzyme. The optimum pH (pH 8.5) was nearly same for aqueous and immobilized enzyme while optimum temperature was nearly 5ºC higher in case of immobilized enzyme. The immobilized/cross linked enzyme was more thermostable at 70 and 80ºC in comparison to aqueous and surface adsorbed lipase on silica and HP-20. The optimum temperature for esterification reactions was determined to be 60-65ºC. Half-life of immobilized lipase was nearly 2.5 x higher than the aqueous enzyme at 70ºC. Esterification of methanol and oleic acid to methyl oleate by immobilized enzyme was studied in detail.