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Lipases are the enzymes that cleave carboxylic ester bonds and are produced by many living organisms like bacteria, fungi, plants and animals. These are the family of hydrolases. Their action is to hydrolyze triglycerides into monoglycerides, diglycerides, glycerol and fatty acids. As the lipases can perform several reactions like esterification, interesterification and transesterification they are widely used in leather, textile, cosmetic, detergent, fine chemistry, cellulose, pulp, paper, medical, effluent treatment, biodiesel production, food and pharmaceutical industries. These enzymes are low cost and easy to produce because of several sources and new technological developments in purification methods. The present paper discusses the various lipase sources, isolation, characterization and purification methods along with their applications.