The relative sensitivities of four methods for the determination of lipase activity was found to be dependent upon the source of the enzyme, when comparisons were made using commercial porcine pancreatic lipase and two partially-purified bacterial lipases. Lipase activity was dependent upon substrate surface area rather than substrate concentration per se. Long-chain insoluble fatty acids were inhibitory to lipase activity. A minimum concentration of fatty acid was required before inhibition of lipase activity occurred. This minimum inhibitory concentration was inversely related to the chain length of the fatty acid. Fatty acid inhibition of lipase activity could be partially reversed by the addition of Ca²⁺. A sensitive and precise assay for the determination of soil lipase activity was developed. The assay involves a 3h 0.1 M tetra-sodium pyrophosphate (pH 7.5) extraction of soil, followed by a 10 min. assay on the extract using the fluorogenic substrate 4-methyl umbelliferone nonanoate (4 MUN). Basal lipase activities of thirteen New Zealand topsoils ranged from 28 to 597 nmol 4-methyl umbelliferone (4 MU) produced min⁻¹ g⁻¹ of oven-dried soil and were not strongly correlated with soil pH, clay content, cation-exchange capacity, or organic matter. The addition of triacylglycerols to soil samples induced microbial production of lipase resulting in triacylglycerol degradation and associated oxygen consumption. With tallow applied to a Hamilton clay loam topsoil sample at the rate of 2.5 mg g⁻¹ and incubated at 25°C, lipase levels increased from 160 nmol 4 MU min⁻¹ g⁻¹ to 490 nmol 4 MU min⁻¹ g⁻¹ after 8 days and the majority of the triacylglycerol was degraded within 14 days. The time for significant triacylglycerol degradation to occur was related to the level of lipase induction upon amendment and not upon the basal lipase levels of the soil. The extent of lipase induction and, therefore, triacylglycerol degradation, was influenced by loading rate, type of triacylglycerol, soil type, temperature, and mineral nutrient additions. In synthetic mixtures of substrates the breakdown of triacylglycerol occurred after the microbial oxidation of alternative substrates. The lipolytic microbiota of both unamended and triacylglycerol-amended soils were isolated. The bacterial population demonstrated the greatest increase upon amendment with triacylglycerols. A bacterial isolate obtained by enrichment culture, and designated Pseudomonas 017, was capable of producing high levels of extracellular inductive lipase when grown upon triacylglycerols, long-chain fatty acids and hydrocarbons. Growth upon these substrates was accompanied by the production of an emulsifying agent. The lipase of Pseudomonas 017 was partially purified and characterised.