The water activity dependence of lipase kinetics in organic media was evaluated using lipases from Rhizopus oryzae and Candida rugosa immobilised on polypropene EP-100. The conversion studied was the transesterification of ethyl decanoate to hexyl decanoate with hydrolysis to decanoic acid as competing reaction. The reactions were carried out at controlled water activity in diisopropyl ether. Substrate inhibition was observed at hexanol concentrations of 100 mM or higher. The Rhizopus lipase expressed the highest activity and the best selectivity for transesterification at the lowest water activity (a(w) = 0.06). The Candida lipase expressed the highest transesterification/hydrolysis ratio at a(w) = 0.11 and the highest total activity at a(w) = 0.53. Several glycosidases previously tested under conditions similar to those used here expressed both maximal total activity and the best selectivity at water activities close to 1.0. The water activity dependence of the lipases is thus fundamentally different from that of glycosidases and it is a major part of the reason why lipases are more suited for transferase-type reactions than the glycosidases.