Microbial lipase today occupies a place of prominence among biocatalysts owing to their ability to catalyze a wide variety of reactions in aqueous and non aqueous media. In this study, Aspergillus terreus showed high lipase production in submerged culture (15.463 ± 0.39 U/mg). The optimum conditions for lipase production by A. terreus were pH range 7-9, a temperature of 30-45ºC for a period of 6 days and ionic strength 60 mM NaCl. Lipase production was also detected when A. terreus was grown on different hydrocarbons, olive oil or tween 80 but not on sugars indicating that the enzyme is inducible by hydrocarbons as well as oils. The kinetics studies showed that the Km value for A. terreus was 8.12 μmol, the optimum pH for lipase activity was 6, the optimum temperature was 30 ± 1ºC and lipase activity could tolerate high levels of ionic strength; however the fungal growth and lipase productivity were very sensitive to increase ionic strength.