The coconut kernel-associated fungus, Lasiodiplodia theobromae VBE1, was grown on coconut cake with added coconut oil as lipase inducer under solid-state fermentation conditions. The extracellular-produced lipases were purified and resulted in two enzymes: lipase A (68,000 Da)-purified 25.41-fold, recovery of 47.1%-and lipase B (32,000 Da)-purified 18.47-fold, recovery of 8.2%. Both lipases showed optimal activity at pH 8.0 and 35 A degrees C, were activated by Ca2+, exhibited highest specificity towards coconut oil and p-nitrophenyl palmitate, and were stable in iso-octane and hexane. Ethanol supported higher lipase activity than methanol, and n-butanol inactivated both lipases. Crude lipase immobilized by entrapment within 4% (w/v) calcium alginate beads was more stable than the crude-free lipase preparation within the range pH 2.5-10.0 and 20-80 A degrees C. The immobilized lipase preparation was used to catalyze the transesterification/methanolysis of coconut oil to biodiesel (fatty acyl methyl esters (FAMEs)) and was quantified by gas chromatography. The principal FAMEs were laurate (46.1%), myristate (22.3%), palmitate (9.9%), and oleate (7.2%), with minor amounts of caprylate, caprate, and stearate also present. The FAME profile was comparatively similar to NaOH-mediated transesterified biodiesel from coconut oil, but distinctly different to petroleum-derived diesel. This study concluded that Lasiodiplodia theobromae VBE1 lipases have potential for biodiesel production from coconut oil.