Bacillus smithii BTMS 11, isolated from marine sediment, produced alkaline and thermostable lipase. The enzyme was purified to homogeneity by ammonium sulfate precipitation and ion exchange chromatography which resulted in 0.51 % final yield and a 4.33 fold of purification. The purified enzyme was found to have a specific activity of 360 IU/mg protein. SDS-PAGE analyses, under non-reducing and reducing conditions, yielded a single band of 45 kDa indicating the single polypeptide nature of the enzyme and zymogram analysis using methylumbelliferyl butyrate as substrate confirmed the lipolytic activity of the protein band. The enzyme was found to have 50°C and pH 8.0 as optimum conditions for maximal activity. However, the enzyme was active over wide range of temperatures (30-80°C) and pH (7.0-10.0). Effect of a number of metal salts, solvents, surfactants, and other typical enzyme inhibitors on lipase activity was studied to determine the novel characteristics of the enzyme. More than 90 % of the enzyme activity was observed even after 3 h of incubation in the presence of commercial detergents Surf, Sunlight, Ariel, Henko, Tide and Ujala indicating the detergent compatibility of B. smithii lipase. The enzyme was also found to be efficient in stain removal from cotton cloths. Further it was observed that the enzyme could catalyse ester synthesis between fatty acids of varying carbon chain lengths and methanol with high preference for medium to long chain fatty acids showing 70 % of esterification. Results of the study indicated scope for application of this marine bacterial lipase in various industries.