We investigated powdered lipase reactions applicable to large-scale production of transesterification oil. Optimal reaction temperature was higher for lipase with lower water content. The optimal reaction temperature of lipase QL, which originates from Alcaligenes sp., was 85 degreesC and its activity was 20% of the activity at the optimal temperature, even at the higher temperature of 130 degreesC. The binding force between lipase and water was examined. The quantity of both the bound and cluster water decreased in the oil dispersed with lipase QL. These results suggest that lipase possessing stronger binding force to water exerts higher activity in the absence of excess water, and, at the same time, that it is not deactivated at higher temperatures. The half-life of lipase activity was determined to be 380 It by repeated reactions using lipase QL at 80 degreesC. Furthermore, the lipase activity did not decrease for around 1000 h during continuous reaction carried out in the lipase QL-packed column in an anhydrous condition at 40 degreesC. We have been producing about 10,000 tonnes of edible oil per year using this method of transesterification.