Esterification by powdered lipase between benzyl alcohol and octanoic acid solubilized in organic solvent was carried out in a stirred tank. The effect of water activity, a(w), in cyclohexane on the esterification rate is examined. The reaction rate reaches a maximum at a(w) a value of 0.8426. Among the kinetic constants obtained for a(w) = 1, 0.924, 0.8426, 0.7528 and 0.634, the maximum reaction rate, V-max, is found to be affected by the wa;er activity. These facts can be explained by the activity of water as a competitive substance in the organic media and the hydration state of the enzyme. The values of Michaelis constants for the acid and the alcohol are constant regardless of the water activity.