The gene coding for an extracellular lipase of Bacillus stearothermophilus L1 was cloned in Escherichia coli. Sequence analysis showed an open reading frame of 1254 bp, which encodes a polypeptide of 417 amino acid residues. The polypeptide was composed of a signal sequence (29 amino acids) and a mature protein of 388 amino acids. An alanine replaces the first glycine in the conserved pentapeptide (Gly-X-Ser-X-Gly) around the active site serine. The expressed lipase was purified by hydrophobic interaction and ion exchange chromatography using buffers containing 0.02% (v/v) Triton X-100. The lipase was most active at 60-65 degrees C and in alkaline conditions around pH 9-10. The lipase had highest activity toward p-nitrophenyl caprylate among the synthetic substrates and tripropionin among the triglycerides. It hydrolyzed beef tallow and palm oil more rapidly than olive oil at 50 degrees C.