Lipases (triacylglycerol acylhydrolases, EC 3.1.1.3) catalyze the hydrolysis and the synthesis of esters formed from glycerol and long-chain fatty acids. Microbial lipases are commercially significant and used for biodiesel production. Vegetable oil (m) ethyl esters, commonly referred to as "biodiesel", are alternative to diesel fuels. In the present study, extracellular lipase of Pseudomonas fluorescens Lp1 isolated from edible oil contaminated soil has been investigated at molecular level and utilized for biodiesel production. The production of extracellular lipase from Pseudomonas fluorescens Lp1 was carried out in the production medium with olive oil (1%) as the carbon and inducer for the enzyme production. Lipase gene, lipA gene was amplified, sequenced and predicted using bioinformatics tools. For biodiesel production, the crude lipase of Pseudomonas fluorescens Lp1 was immobilized onto calcium alginate beads for transesterification of olive oil and waste cooking oil into biodiesel. The transesterification product of Fatty acid methyl ester (FAME) was analyzed by thin layer chromatography. The results of the investigation revealed the potential of lipase of Pseudomonas fluorescens Lp1 utilized in biodiesel production.