Among several lipase-producing actinomycete strains screened, Amycolatopsis mediterranei DSM 43304 was found to produce a thermostable, extracellular lipase. Culture conditions and nutrient source modification studies involving carbon sources, nitrogen sources, incubation temperature and medium pH were carried out. Lipase activity of 1.37 +/- 0.103 IU/ml of culture medium was obtained in 96 h at 28 degrees C and pH 7.5 using linseed oil and fructose as carbon sources and a combination of phytone peptone and yeast extract (5:1) as nitrogen sources. Under optimal culture conditions, the lipase activity was enhanced 12-fold with a twofold increase in lipase specific activity. The lipase showed maximum activity at 60 degrees C and pH 8.0. The enzyme was stable between pH 5.0 and 9.0 and temperatures up to 60 degrees C. Lipase activity was significantly enhanced by Fe(3+) and strongly inhibited by Hg(2+). Li(+), Mg(2+) and PMSF significantly reduced lipase activity, whereas other metal ions and effectors had no significant effect at 0.01 M concentration. A. mediterranei DSM 43304 lipase exhibited remarkable stability in the presence of a wide range of organic solvents at 25% (v/v) concentration for 24 h. These features render this novel lipase attractive for potential biotechnological applications in organic synthesis reactions.