The activity and stability of Chromobacterium viscosum lipase (glycerolester hydrolase, EC 3.1.1.3)-catalyzed olive oil hydrolysis in sodium bis (2-ethyl-l-hexyl)sulfosuccinate (AOT)/isooctane reverse micelles is increased appreciably when low molecular weight polyethylene glycol (PEG 400) is added to the reverse micelles. To understand the effect of PEG 400 on the phase behavior of the reverse micellar system, the phase diagram of AOT/ PEG 400/water/isooctane system was studied. The influences of relevant parameters on the catalytic activity in AOT/PEG 400 reverse micelles were investigated and compared with the results in the simple AOT reverse micelles. In the presence of PEG 400, the linear decreasing trend of the lipase activity with AOT concentration, which is observed in the simple AOT reverse micelles, disappeared. Enzyme entrapped in AOT/PEG reverse micelles was very stable, retaining >75% of its initial activity after 60 d, whereas the half-life in simple AOT reverse micelles was 38 d. The kinetics parameter maximum velocity (Vmax) exhibiting the temperature dependence and the activation energy obtained by Arrhenius plot was suppressed significantly by the addition of PEG 400.