Thermostability and substrate specificity are important characteristics of enzymes for industrial application, which can be improved by protein engineering. SMG1 lipase from Malassezia globosa is a mono- and diacylglycerol lipase (MDL) that shows activity toward mono- and diacylglycerols, but no activity toward triacylglycerols. SMG1 lipase is considered a potential biocatalyst applied in oil/fat modification and its crystal structure revealed that an interesting residue-Asn277 may contribute to stabilize loop 273-278 and the 3(10)4 helix which are important to enzyme characterization. In this study, to explore its role in affecting the stability and catalytic activity, mutagenesis of N277 with Asp (D), Val (V), Leu (L) and Phe (F) was conducted. Circular dichroism (CD) spectral analysis and half-life measurement showed that the N277D mutant has better thermostability. The melting temperature and half-life of the N277D mutant were 56.6 degrees C and 187 min, respectively, while that was 54.6 degrees C and 121 min for SMG1 wild type (WT). Biochemical characterization of SMG1 mutants were carried out to test whether catalytic properties were affected by mutagenesis. N277D had similar enzymatic properties as SMG1 WT, but N277F showed a different substrate selectivity profile as compared to other SMG1 mutants. Analysis of the SMG1 3D model suggested that N277D formed a salt bridge via its negative charged carboxyl group with a positively charged guanidino group of R227, which might contribute to confer N277D higher temperature stability. These findings not only provide some clues to understand the molecular basis of the lipase structure/function relationship but also lay the framework for engineering suitable MDL lipases for industrial applications.