Abstract: Microbial lipases catalyzing the hydrolysis and synthesis of esters from glycerol and fatty acids are commercially important in food, dairy, detergent and leather industries. In the present study, 15 thermo-alkalophilic bacterial strains isolated from a compost soil sample were screened for lipase production in beef extract nitrate medium containing 1% tributyrin. The strain 8C, giving maximum lipolytic activity was morphologically and biochemically identified as Bacillus sp. Lipase production from strain 8C was optimized by studying effects of incubation period, initial pH of medium, carbon and nitrogen sources, metals, substrates and thiols under static conditions. Lipase production was maximum after 7 days of incubation at 50°C and pH 9.0 and when sesame oil was used as a substrate. Supplementation of ribose or raffinose and ammonium sulphate (1%) as sole sources of carbon and nitrogen also stimulated lipase production over control. Of the different thiols tested, methionine greatly increased lipase production (175 Eu mL–1) whereas, FeCl3 (50 mM) found to be most suitable metal salt for optimal lipase production (300 Eu mL–1). Under optimized conditions, lipase production by thermo-alkalophilic Bacillus sp. 8C was increased by 6.36 fold compared to unoptimized conditions.