Staphylococcus epidermidis isolated from spoiled frozen marine fish samples exhibited optimum lipase activity of 8.1 U within 72 h in batch fermentation. Inducible effect of different sugars, nitrogen sources, salts and metal ions were studied on enzyme production. Trybutyrin induced the enzyme production by twofold. Addition of lactose in the production medium further improved lipase production. Sodium chloride increased lipase production whereas the presence of metals in the media had an inhibitory effect. Cells of immobilized S. epidermidis in agar beads (3%) increased lipase production compared with free cells. The optimum temperature and pH for enzyme activity was 20°C and 7.0 respectively. Lipase retained its 85% stability at pH 6.0 and at 40°C. Immobilized cells with high lipolytic activity and stability may provide commercial advantages over conventional methods of lipase production.