Pseudomonas sp.Lp.1 isolated from oil contaminated soil produced an inducible extracellular lipase. Olive oil (1%) was used as the inducer for enzyme production. The optimum conditions for the assay of enzyme activity was found to be with 4-Nitrophenyl palmitate as the substrate incubated at 45^oC for 20 minutes at pH 8.0. The enzyme was purified 18 – fold by ammonium sulfate fractionation, Dialysis and Sephadex G-100 chromatography. The purified enzyme showed a prominent polypeptide band in polyacrylamide gel and the presence of lipase was confirmed by zymogram analysis. Molecular weight of the lipase was estimated to be 49.0 kDa. The optimum pH and temperature for activity of the enzyme were 8.0 and 40°C, respectively. The lipase was stable in the pH range of 7.0 – 10.0 and showed its half-life at 40°C to be 2 h.  Metal ions CaCl₂ and KCl enhanced lipase activity, whereas Na²⁺, Mg²⁺ and Mn²⁺ did not alter the activity and Cu²⁺, Fe²⁺ and Zn²⁺ inhibited the stability of the enzyme.  The enzyme was stable in the organic solvents ethanol and acetone whereas the methanol, hexane, chloroform and diethyl ether showed the inhibitory action on the enzyme.