A lipid-coated lipase has been known to be soluble in organic solvents and act as an efficient esterification catalyst in the dry organic solvent. It was also found to act as an efficient hydrolytic catalyst for lipophilic esters in the two-phase aqueous-organic system. Both the lipid-coated lipase and substrates are solubilized in the organic phase and the hydrolysis occurs with water molecules from the aqueous phase. Therefore, the reaction was 40-100 times faster than that of the native lipase, in which the enzyme and substrate exist separately in the aqueous and organic phase, respectively, and the reaction proceeded at the interface. The hydrolysis rates for the lipid-coated lipase were not affected by the aqueous pH and agitation speed of the two-phase. Enzymatic activity of the lipid-coated lipase was compared with that of the poly(ethylene glycol)-grafted lipase. Michaelis-Menten kinetics in the two-phase reactions was also studied.