Lipids in biological matter are mostly triacylglycerols (TAG). Lipolytic enzymes, primarily lipases, are indispensable for bioconversion of such lipids from one organism to another and within the organisms. In addition to their biological significance, lipases are very important in the field of food technology, nutritional and pharmaceutical sciences, chemical and detergent industries, and clinical medicine because of their ability to catalyze various reactions involving a wide range of substrates. Conventionally, lipases have been viewed as the biocatalysts for the hydrolysis of TAG (fats and oils) to free fatty acids, monoacylglycerols (MAG), diacylglycerols (DAG), and glycerol. The main advantages of lipase catalysis are selectivity, stereo-specificity, and mild reaction conditions. Despite these advantages and the fact that enzymatic splitting of fats for fatty acid production was described as early as in 1902, the lipase-catalyzed process has not replaced the commercial physicochemical process for the continuous splitting of TAG utilizing super-heated steam. The limited exploitation of lipase technology may be attributed to high enzyme cost, large reaction volume, requirement for emulsification of substrate, and risk of microbial contamination. Many of these limitations originate from the fact that lipases are employed mainly in water-rich reaction media where the solubility of the substrate TAG is very small. To circumvent this problem and to realize the full potential of lipase, researchers have explored newer approaches by manipulating the conditions under which the lipases act. Many of these novel approaches for lipase catalysis have been the outcome of the discovery that enzymes can be active in water-poor, non-polar media (Hanhan, 1952; Misiorowski and Wells, 1974; Zaks and Klibanov, 1984). Also, the finding that lipases can act in organic solvents has led lo an expansion of their applicability in a wide variety of chemical reactions. Lipase catalysis in some of the well established reaction media has previously been reviewed (Brockerhoff and Jensen, 1974; Brockman, 1984; Lilly et al., 1987; Hailing, 1990; Inadael al, 1990; Malcataet al., 1990). The present review is intended to present a compilation and comparison of novel reaction systems used for lipase catalysis. This review describes briefly the general characteristics of lipase reactions, applications of lipase in various fields, and conventional lipase technology. The lipase-mediated biochemical reactions, particularly the hydrolysis of TAG in novel reaction media is discussed in greater detail.