Aims: To establish a relationship between lipase gene expression and aflatoxin production by cloning the lipA gene and studying its expression pattern in several aflatoxigenic and nontoxigenic isolates of Aspergillus flavus and A. parasiticus. Methods and Results: We have cloned a gene, lipA, that encodes a lipase involved in the breakdown of lipids from aflatoxin-producing A. flavus, A. parasiticus and two nonaflatoxigenic A. flavus isolates, wool-1 and wool-2. The lipA gene was transcribed under diverse media conditions, however, no mature mRNA was detected unless the growth medium was supplemented with 0.5% soya bean or peanut oil or the fungus was grown in lipid-rich medium such as coconut medium. The expression of the lipase gene (mature mRNA) under substrate-induced conditions correlated well with aflatoxin production in aflatoxigenic species A. flavus(SRRC 1007) and A. parasiticus (SRRC 143). Conclusions: Substrate-induced lipase gene expression might be indirectly related to aflatoxin formation by providing the basic building block acetate for aflatoxin synthesis. No direct relationship between lipid metabolism and aflatoxin production can be ascertained, however, lipase gene expression correlates well with aflatoxin formation. Significance and Impact of the Study: Lipid substrate induces and promotes aflatoxin formation. It gives insight into genetic and biochemical aspects of aflatoxin formation.