ABSTRACT The purpose of this study was to isolate, purify and optimize the production conditions of an organic solvent tolerant and thermostable lipase from Acinetobacter sp. AU07 isolated from distillery waste. The lipase production was optimized by response surface methodology, and a maximum production of 14.5 U/mL was observed at 30 ºC and pH 7, using a 0.5% (v/v) inoculum, 2% (v/v) castor oil (inducer), and agitation 150 rpm. The optimized conditions from the shake flask experiments were validated in a 3 L lab scale bioreactor, and the lipase production increased to 48 U/mL. The enzyme was purified by ammonium sulfate precipitation and ion exchange chromatography and the overall yield was 36%. SDS-PAGE indicated a molecular weight of 45 kDa for the purified protein, and Matrix assisted laser desorption/ionization time of flight analysis of the purified lipase showed sequence similarity with GDSL family of lipases. The optimum temperature and pH for activity of the enzyme was found to be 50 ºC and 8.0, respectively. The lipase was completely inhibited by phenylmethylsulfonyl fluoride but minimal inhibition was observed when incubated with ethylenediaminetetraacetic acid and dithiothreitol. The enzyme was stable in the presence of non-polar hydrophobic solvents. Detergents like SDS inhibited enzyme activity; however, there was minimal loss of enzyme activity when incubated with hydrogen peroxide, Tween 80 and Triton X-100. The kinetic constants (Km and Vmax) revealed that the hydrolytic activity of the lipase was specific to moderate chain fatty acid esters. The Vmax, Km and Vmax/Km ratio of the enzyme were 16.98 U/mg, 0.51 mM, and 33.29, respectively when 4-nitrophenyl palmitate was used as a substrate.