The fungus Geotrichum candidum produces extracellular lipases. Purification and characterization of different lipase isoforms from various G. candidum strains is difficult due to the close physical and biochemical properties of the isoforms. Consequently, the characterization of these enzymes and their substrate specificities has been difficult. We have determined the lipase genes present in four strains of G. candidum (ATCC 34614, NRCC 205002, NRRL Y-552 and NRRL Y-553) by molecular cloning and DNA sequencing. Each strain contains two genes similar to the previously identified lipase I and lipase I1 cDNAs. Our data suggest that no other related lipase genes are present in these strains. Each lipase-gene family shows sequence variation (polymorphism) that is confirmed by Southern-blot analysis. This polymorphism and the sequence differences between lipase I and lipase I1 have been localized within the previously determined three-dimensional structure of lipase 11. Although most of the amino acid substitutions are located on the protein surface, some are present in structural features possibly involved in determining substrate specificity.Lipases (glycerol ester hydrolases) are rather unusual amongst soluble enzymes in that they exhibit increased activity at a waterdipid interface (Brockman, 1984), a phenomenon called interfacial activation. This activation process involves large movement of one surface loop (flap) which is sometimes associated with movements of other loops (Brzozowski et al., 1991;Grochulski et al., 1993: van Tilbeurgh et al., 1993. A great need to understand the molecular basis of lipase catalysis and substrate selectivity arises from their high industrial potential.The lipase produced by the fungus Geotrichum candidum (GC) was one of the first lipases investigated and many reports on its production, isolation, activity and selectivity appeared over the years (for review see Charton, 1991). Crude enzyme preparations from different GC strains exhibited varying degrees of specificity for the kind and position of the fatty acids hydrolyzed from triacylglycerols and fatty esters. For example, using methyl and butyl esters of oleic and palmitic acids to examine the specificity of crude enzyme preparations from a series of GC strains, strains ATCC 34614 and NRRL Y-552 were reported to produce lipases which did not discriminate between 1 8 : l and 16:O fatty acid esters. However, lipases from other strains (including NRRL Y-553) showed a preference for 18: 1 methyl ester (Baillargeon et al