This study presents the production of biodiesel from algae oil by transesterification using thermophilic microorganism. The microorganism used in this study was isolated from the soil sample obtained near the furnace. The organism was identified as Bacillus sp., and the lipase obtained was purified by ammonium sulfate precipitation and ion exchange chromatography leading to 8.6-fold purification and 13% recovery. Molecular weight of the enzyme was determined by sodium dodecyl sulfate-polyacrylamide gel electrophoresis, and it was found to be 45 kDa. The effect of pH, temperature, and solvent addition on lipase activity was investigated. The enzyme showed maximum activity at 55 A degrees C and at pH 7 and was also found to be highly active in the presence of organic solvents such as hexane and t-butanol. The isolated lipase was successfully used for the production of biodiesel. The transesterification activity of the isolated lipase showed 76% of fatty acid methyl esters yield in 40 h, which indicated that this enzyme can be used as a potential biocatalyst for the biodiesel production.