Recombinant Candida rugosa lipase 5 (LIP5) has been functionally expressed along with other isoforms in our laboratory. However, the characterization and codon optimization of LIP5 have not been done. In this work, we characterized, codon-optimized and compared LIP5 with commercial lipase. LIP5 activity on hydrolysis of p-nitrophenyl (p-NP) butyrate was optimal at 55 °C as compared with 37 °C of the commercial lipase. Several assays were also performed to determine the substrate specificity of LIP5. p-NP butyrate (C(4)), butyryl-CoA (C(4)), cholesteryl laurate (C(12)), and N-carbobenzoxy-l-tyrosine-p-nitrophenyl ester (l-NBTNPE) were found as preferred substrates of LIP5. Interestingly, LIP5 specificity on hydrolysis of amino acid-derivative substrates was shown to be the highest among any lipase isoforms, but it had very weak preference on hydrolyzing triacylglycerol substrates. LIP5 also displays a pH-dependent maximum activity of a lipase but an esterase substrate preference in general. The characterization of LIP5 along with that of LIP1-LIP4 previously identified shows that each lipase isoform has a distinct substrate preference and catalytic activity.