The production of lipase by Yarrowia lipolytica 681 was enhanced significantly (P < 0.05) by olive or corn oil when used as both carbon and inducer sources. Urea was the best nitrogen source for lipase production. Low levels of aeration increased lipolytic activity and mycelia formation in the culture medium. Concentrations of Tween 80 between 0.5 and 2 g/l increased extracellular lipase activity without changes in the concentration of biomass. A response surface analysis predicted a temperature of 29.5 degrees C, an initial pH of 4.7 and an incubation time of 54 h as the optimum conditions for lipase production. Lipase production was strongly correlated to biomass during 52 h of incubation. The enzyme had a maximum activity at pH 6 and 37 degrees C. The lipase did not lose significant amounts of activity during incubation at pH 6 and 5 degrees C for 72 h. The enzyme was highly active towards synthetic triacylglycerols and olive oil. However, the lipase was strongly inhibited by oleic acid.