Selective production of fragrance fatty acid ester from isopropanol and acetic acid has been achieved using silica-immobilizedlipase of Bacillus cereus MTCC 8372. A purified thermoalkalophilic extracellular lipase was immobilized by adsorption onto the silica. The effects of various parameters like molar ratio of substrates (isopropanol and acetic acid; 25 to 100 mM), concentration ofbiocatalyst (25–125 mg/mL), reaction time, reaction temperature, organic solvents,molecular sieves, and initial water activity werestudied for optimal ester synthesis. Under optimized conditions, 66.0mM of isopropyl acetate was produced when isopropanol and acetic acid were used at 100mM: 75mM in 9h at 55◦C in n-heptane under continuous shaking (160 rpm) using bound lipase(25mg). Addition of molecular sieves (3 °A ×1.5mm) resulted in a marked increase in ester synthesis (73.0mM). Ester synthesiswas enhanced by water activity associated with pre-equilibrated saturated salt solution of LiCl. The immobilized lipase retained more than 50% of its activity after the 6th cycle of reuse.