We developed a nanoparticulate Rhizopus arrhizus lipase formulation to enhance its activity and to increase the conversion yield of lipids into fatty acid methyl esters (FAME, a.k.a., biodiesel). More than 95% purity of the lipase was achieved in a two-step purification. Nanoparticle formulation was afforded by co-lyophilization of the lipase with methyl-βcyclodextrin (MβCD), an established lyoprotectant. Scanning electron microscopy and dynamic light scattering measurements showed a size of 75− 200 nm for the nanoparticles depending on the ratio of lipase-to-MβCD employed during co-lyophilization. Fourier transform infrared spectroscopic analysis by Gaussian curve fitting of the resolution-enhanced amide I region of lyophilized and nanoparticulate lipase indicated a more native-like secondary structure in the latter. A 98% substrate-to-FAME conversion was achieved in 10 h in n-hexane by lipase nanoparticles, whereas the crude and lyophilized enzyme showed 65 and 70% conversion in 18 h, respectively. In this aspect, the lipase nanoparticles were superior to all other reported systems. Operational stability after 5 catalytic conversions of nanoparticles was found to be >81%. In summary, we herein developed a novel lipase formulation for efficient catalysis in lipid-to-biodiesel conversion.