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In this study, the food spoilage by the action of psychrophilic lipase has been investigated with respect to chicken meat and liver, which are stored at chilling temperatures in many places like the supermarkets. The lipolytic activity of some of the major psychrophilic bacterial population of chicken meat and liver available in the local market was seem to responsible not only for loss of flavor but also for production of certain toxic substances like 7-(2-hydroxyethyl)-monascorubramine, a red pigment produced by certain Penicillium sp. This is the unique report highlighting the importance of lipolysis as a cause of chicken meat and liver spoilage.