An endosymbiotic Pseudomonas sp. (MSI057), which could produce high yields of lipase, was isolated from marine sponge Dendrilla nigra, collected from the peninsular coast of India. Maximum production of enzyme was obtained in minimal medium supplemented with 1% tributyrin. Catabolite repression was observed when the medium was supplemented with readily available carbon sources. The optimum temperature and pH for the enzyme production was 30 degrees C and 9.0, respectively. The enzyme exhibited maximum activity in pH range of 8-9 with an optimum pH 9.0. The activity of purified enzyme was optimum at 37 degrees C and showed 80% activity at 20 degrees C and the enzyme activity decreased dramatically above 50 degrees C. Based on the present findings, the enzyme was characterized as psychrophilic alkaline lipase, which can be developed for industrial applications.