Extracellular lipase activity detected on tributyrin agar has been identified in a cosmid clone, JMP3084, constructed from the chromosome of Aeromonas hydrophila and vector pHC79. This lipase, named apl-1, also exhibits nonhemolytic phospholipase C activity on lecithin and p-nitrophenylphosphorylcholine. Subcloning of the cosmid JMP3084 with partial Sau3a1 digestion localized the lipase gene to a 3.4-kb DNA fragment. Southern blot analysis shows the gene apl-1 to exist in single copy on the A. hydrophila chromosome. Expression of apl-1 in the pT7 system identified a single protein of molecular weight 70 kDa. Nucleotide sequencing of apl-1 has identified an open reading frame of 2055 bases predicting a protein of 73 kDa. The presence of an amino terminal signal sequence of 18 amino acids accounts for this molecular weight disparity. Further analysis of the lipase amino acid sequence revealed the presence of a classical serine active lipase site (Gly-X-Ser-X-Gly) located between residues 561 and 570. The A. hydrophila chromosomal copy of apl-1 has been inactivated by use of the mutagenesis vector pJP5603, resulting in the complete removal of phospholipase C activity and lowered levels of lipase activity detected on tributyrin agar.