A thermostable lipase was produced in continuous cultivation of a newly isolated thermophilic Bacillus sp. strain IHI-91 growing optimally at 65 °C. Lipase activity decreased with increasing dilution rate while lipase productivity showed a maximum of 340 U l⁻¹ h⁻¹ at a dilution rate of 0.4 h⁻¹. Lipase productivity was increased by 50% compared to data from batch fermentations. Up to 70% of the total lipase activity measured was associated to cells and by-products or residual substrate. Kinetic and stoichiometric parameters for the utilisation of olive oil were determined. The maximal biomass output method led to a saturation constant K _S of 0.88 g/l. Both batch growth data and a washout experiment yielded a maximal specific growth rate, μ_max, of 1.0 h⁻¹. Oxygen uptake rates of up to 2.9 g l⁻¹h⁻¹ were calculated and the yield coefficient, Y _X/O, was determined to be 0.29 g dry cell weight/g O₂. From an overall material balance the yield coefficient, Y _X/S, was estimated to be 0.60 g dry cell weight/g olive oil.