This study describes the biochemical properties of Staphylococcus aureus lipase immobilized by physical adsorption to assess its role in the biodegradation of oils in the Wadi Hanifah River. After optimization of the immobilization conditions, the recovered enzyme activity was 95% with appreciable increase in stability. The immobilized and free lipase retained 70% and only 10% of the initial activity after a 60‐min incubation at 80 °C, respectively. More than ~40% residual activity remained after 48 h of incubation at pH5 to 11. The immobilized enzyme retained 100% of the initial activity when used for four cycles and 42% of initial activity when stored at 25 °C for 120 days. Enzyme stability was enhanced in the presence of inactivating agents including β‐mercaptoethanol, SDS, EDTA, and Co2+. The bioremediation potential of lipid‐rich wastewater by the immobilized and free lipases was explored by analyses of chemical oxygen demand and lipid content. Both free and immobilized lipases efficiently hydrolyzed all oils tested and organic matter present in the wastewater. Overall, the results indicate the potential of immobilized S. aureus lipase in biological wastewater treatment and offer new options for several industrial applications. © 2018 American Institute of Chemical Engineers Environ Prog, 38:e13000, 2019