This paper first describes characterization of two thermostable esterases (ThLip1 and ThLip2) from the thermophilic bacterium Thermoanaerobacterium thermosaccharolyticum DSM 571. The recombinant esterase ThLip1 was active at 80 degrees C, pH 6.5 and maintained approx. 85% of original activity after 2 h incubation at 75 degrees C. Kinetic parameters, K-m, V-max and k(cat)/k(m) for 4-Nitrophenyl caprylate (pNPC) were 3.52 +/- 0.47 mM, 191.18 +/- 1.82 mu mol min(-1) mg(-1) and 20.80 +/- 0.07 mM(-1) s(-1), respectively. The purified recombinant esterase ThLip2 was optimally active at pH 6.5 and 75 degrees C and it was stable against a pH range of 6.0-8.0 possessing 2 h half-life at 80 degrees C. Kinetic experiments at 75 degrees C with pNPC as a substrate gave a Km of 3.37 mM, V,a of 578.14 mu mol min(-1) mg(-1) and k(cat) of 231.2 s(-1). The hydrolysis of linalyl acetate were carried out using ThLip1 and ThLip2 as catalyst, affording linalool yields over 140 mg/l in 10 h.