A mesophilic bacterial culture producing a novel thermostable alkaline lipase was isolated from oil rich soil sample and identified as Bacillus subtilis EH 37. The lipase was partially purified by ammonium sulfate precipitation and hydrophobic interaction chromatography with 17.8-fold purification and 41.9 U/ml specific activity. The partially purified enzyme exhibited maximum activity at pH 8.0 and at 60 degrees C. It retained 100% of activity at 50 degrees C and 60 degrees C for 60 min. The presence of Ca+2, Mg+2, and Zn2+ exhibited stimulatory effect on lipase activity, whereas Fe+3 and Co+2 reduced its activity. The enzyme retained more than 80% of its initial activity upon exposure to organic solvents, exhibited 107% and 115% activity in the presence of 15% isopropyl alcohol and 30% n-hexane, respectively. The EH 37 lipase also proved to be an efficient catalyst in synthesis of ethyl caprylate in organic solvent, thus providing a concept of application of B. subtilis lipase in non-aqueous catalysis.