Kinetics of lipase catalyzed transesterification of ethyl caprate and butyric acid was investigated. The objective of this work was to propose a reaction mechanism and develop a rate equation for the synthesis of ethyl butyrate by transesterification using surfactant coated lipase from . The reaction rate could be described in terms of Michaelis-Menten equation with a Ping-Pong Bi-Bi mechanism and competitive inhibition by both the substrates. The values of kinetic parameters computed were V = 2.861 μmol/min/mg; K = 0.0746 M; K = 0.125 M; K acid = 0.450 M. This study indicated a competitive enzyme inhibition by butyric acid during lipase catalyzed transesterification reaction. Experimental observations had clearly indicated that the substrates as well as product act as dead-end inhibitors.