An intracellular glycerol ester hydrolase (lipase) from Propionibacterium shermanii was recovered from cell-free extracts and purified by ammonium sulfate precipitation, gel filtration, and ion-exchange chromatography on diethylaminoethylcellulose. Maximum enzyme activity was observed at pH 7.2 and 47 C when an emulsion of tributyrin was used as substrate. The enzyme was stable between pH 5.5 and 8. Heating the enzyme solution at 45 C for 10 min resulted in a 75% decrease in activity. Maximum rate of hydrolysis of triglycerides was observed on tripropionin, followed in order by tributyrin, tricaproin, and tricaprylin. The lipase was strongly inhibited by mercury and arsenicals, but specific sulfhydryl reagents had little or no inhibiting effect on the enzyme activity. The enzyme also showed some esterase activity, but the hydrolysis of substrates in solution was small as compared to the hydrolysis of substrates in emulsion.