In the first step of the present study, cultural conditions were optimized for the enhanced production of lipase by Penicillium notatum and Pleurotus ostreatus. Different agricultural wastes viz., canola oilseed cake, sesame oilseed cake, linseed oil cake, cotton oilseed cake; rice bran and wheat bran were used as substrates for their potential to be used for the production of lipase under solid state fermentation conditions. Among these, the canola oil seed cake was proved to be best substrate for production of lipase under solid state fermentation conditions. Optimization of different physicochemical factors led to 2 folds and 1.6 folds enhancement in lipase production by Penicillium notatum and Pleurotus ostreatus respectively. Under these conditions the enzyme activity was observed to be 5335 U/gds and 3118 U/gds respectively. Penicillium lipase due to high activities was selected for further studies. Penicillium notatum lipase was purified to homogeneity by four step purification strategy to achieve 28.88 fold purified enzyme with 13.4% recovery and specific activity, 26779 U/mg. The molecular weight of the homogeneous lipase was 46 kDa as determined by SDS-PAGE. It was optimally active at pH 9.5 and 40°C. The Michaelis Menten constants (Km) and Vmax of lipase from Penicillium notatum for para nitrophenyl palmitate hydrolysis at optimum temperature were 3.33 mM and 232.6 m mol/mL min-1 respectively. The Penicillium notatum lipase was stable in the broad pH range from pH 6.0 to 12, with maximum stability in the range of 8.5-11.0. The enzyme show a high thermo-stability with half lives of 8.25 hrs, 3.2 hrs, 1.12 hrs and 0.58 hrs 40, 50, 60 and 70°C. The activation energy for denaturation was 81.1 kJ/mol. The enzyme activity was enhanced significantly by Ca2+. Exposure to hydrophobic environment (urea solution and organic solvents), did not affect the enzyme significantly. However when incubated with protease solution, denaturation of enzyme was observed. In the next part of study Penicillium notatum lipase was immobilize by carrier bound and carrier free technique of immobilization. Entrapment was more efficient in terms of high relative activity and immobilization efficiency as compared to cross linking. Both the immobilization techniques greatly enhanced the thermo stability of enzyme. Temperature optima for lipase activity shifted to higher temperatures as compared to the free enzyme. The reusability of immobilized enzyme was excellent in case of silicon entrapped enzyme. During this study we were able to find a mild cross linker (EG- NHS) which can replace the conventionally used glutaraldehyde with retention of higher activities. The cross linked aggregates of the enzyme have shown very good stability as compared to free enzyme. However the reusability was not very promising as compared to the entrapped enzyme.