This study investigated the screening, production and optimization of an extracellular lipase from a fungus isolated from the contaminated soil of a palm oil processing shed. This was with a view to obtaining a strain that can secrete lipase with biochemical properties exploitable for biotechnological applications such as bioremediation of oil contaminated sites. Soil samples were collected from palm oil contaminated sites in Gbogan, Osun State, Nigeria (Latitude N 7°29.1481´ and Longitude E 4°20.7587´). The isolated fungal strains were screened on tributyrin agar for exogenous lipolytic activity. Molecular identification was carried out by amplifications of ITS-1, 5.8S and ITS-2 regions. The effects of incubation time, inducers, pH, temperature, carbon and nitrogen sources were varied for optimal lipase production using one factor at a time approach. Rhizopus oryzae ZAC3 (NCBI accession No: KX035094) was identified as the highest lipaseproducing strain. Maximum lipase production was observed on the fourth day, pH 5.0 and a temperature of 45 o C. Olive oil, xylose and yeast extract were the best inducer, carbon and nitrogen sources respectively for lipase production. There was a 2.02 fold increase in lipase production under these optimized conditions. In conclusion, Rhizopus oryzae ZAC3 lipase has properties exploitable for industrial and biotechnological applications.