Lipase from Candida rugosa was immobilized in alginate beads for possible application in non-aqueous or microaqueous reaction systems. An electrostatic droplet generation technique was used for production of small diameter (< 1 mm) lipase-alginate beads. This technique provided negligible loss of the lipase (immobilization efficiencies were 98.2-99.2%). Under optimal immobilization conditions (applied potential 4.9 kV, needle gauge 21, 2% sodium alginate solution) the lipase-alginate beads, 0.65 mm in diameter, retained enzyme activity equivalent to 75% that of free lipase. The activity of the immobilized lipase was verified in the reaction of palm oil hydrolysis in a lecithin/isooctane system. The reaction rate with alginate-immobilized lipase was lower than with the free enzyme but the final conversions were approximately the same (similar to 74%). Immobilized lipase could be used for up to three reaction cycles with little loss of activity. (C) 2002 Elsevier Science Ltd. All rights reserved.