Lipase enzyme producing bacteria, Pseudomonas sp., have been grown at varying oil concentrations to make it adaptive for high oil concentrations and it was found to show the maximum growth and maximum lipase activity when 40- and 30-vol% of oil respectively was used as a source of carbon in growth medium. Bacteria was immobilized with sodium alginate and used as whole cell catalyst for the transesterification of used cotton seed oil. Preliminary experiments resulted about 70% transesterification of used cotton seed oil with methanol as calculated by proton NMR technique.