This study entailed the partial purification and characterization of a lipase produced from Streptomyces sp AU-1 (LipSAU-1). Lipase activity was measured with p-nitrophenyl palmitate (p-NPP) as a substrate. Ammonium sulphate precipitation, dialysis and gel filtration chromatography were used in the partial purification of LipSAU-1. SDS-PAGE showed the purified LipSAU-1 to be homogeneous, with a molecular mass of approximately 66 kDa. LipSAU-1 was found to have an optimal pH of 9.0 and an optimal temperature of 50 degrees C, with high stability at all pH and temperature values tested in this study. The enzyme conserved approximately 55% of its activity at the end of 1 h in the presence of methanol. Its hydrolytic activity was found to be highest towards p-NPP among the various p-nitrophenyl esters and towards olive oil among the various natural substrates investigated. Thin layer chromatography (TLC) and gas chromatography (GC) were used to analyze the fatty acid alkyl ester content of the biodiesel produced by the reaction using LipSAU-1 as a catalyst. LipSAU-1's transesterification activity indicated it to be a potential biocatalyst for biodiesel production, given its high activity under thermophilic conditions and stability in the presence of various alcohols.