Lipase from Pseudomonas cepacia was made soluble in 1,4-diaxane by lyophilization of the enzyme from aqueous solutions containing methoxypoly(ethylene glycol) (PEG). The solubility of the enzyme-PEG complex depended both on protein concentration and PEG protein ratio. Intrinsic protein fluorescence and far- and near-UV circular dichroism revealed that not only did the enzyme not unfold in the organic solvent, but rather became more compact. This was seen by the slight quenching of fluorescence intensity and by the enhancement of the near-UV circular dichroism negative signals, which are indicative of stronger interactions of tryptophanyl and/or tyrosyl residues among themselves or with other parts of the enzyme molecule. The specific activity of the lipase-PEG complex in the organic solvent was at least 2 orders of magnitude higher than that of the enzyme powder. This can be attributed both to the maintenance of native conformation and to enzyme dissolution in the reaction medium which should minimize possible limitations to enzyme-substrate interactions.