Escherichia fergusonii KLU01, a propitious bacterial strain isolated from oil contaminated soil was identified to be hydrocarbon degrading, heavy metal tolerant and a potent producer of biosurfactant using diesel oil as the sole carbon and energy source. The biosurfactant produced by the strain was characterized to be a lipopeptide. The minimum active dose and critical micelle concentration of the biosurfactant were found as 0.165 +/- 0.08 mu g and 36 mg/L, respectively. In spite of being an excellent emulsifier, the biosurfactant showed an incredible stability at extremes of temperature, pH and at various concentrations of NaCl, CaCl(2) and MgCl(2). Also the bacterium manifested tolerance towards Manganese, Iron, Lead, Nickel, Copper and Zinc. The strain emerges as a new class of biosurfactant producer with potential environmental and industrial applications, especially in hydrocarbon degradation and heavy metal bioremediation. (C) 2011 Elsevier Ltd. All rights reserved.