Enzymatic transesterification of soybean oil with methanol and ethanol was studied. Of the nine lipases that were tested in the initial screening, lipase PS from Pseudomonas cepacia resulted in the highest yield of alkyl esters. Lipase from Pseudomonas cepacia was further investigated in immobilized form within a chemically inert, hydrophobic sol-gel support. The gel-entrapped lipase was prepared by polycondensation of hydrolyzed tetramethoxysilane and iso-butyltrimethoxysilane. Using the immobilized lipase PS, the effects of water and alcohol concentration, enzyme loading, enzyme thermal stability, and temperature in the transesterification reaction were investigated. The optimal conditions for processing 10 g of soybean oil were: 35 degrees C, 1:7.5 oil/methanol molar ratio, 0.5 g water and 475 mg lipase for the reactions with methanol, and 35 degrees C, 1:15.2 oil/ethanol molar ratio, 0.3 g water, 475 mg lipase for the reactions with ethanol. Subject to the optimal conditions, methyl and ethyl esters formation of 67 and 65 mol% in 1h of reaction were obtained for the immobilized enzyme reactions. Upon the reaction with the immobilized lipase, the triglycerides reached negligible levels after the first 30 min of the reaction and the immobilized lipase was consistently more active than the free enzyme. The immobilized lipase also proved to be stable and lost little activity when was subjected to repeated uses.