Though designed by nature to effect hydrolysis of lipids, lipases can, under appropriate reaction conditions, promote ester formation through reaction of acids and alcohols (esterification) or of esters with acids (acidolysis), alcohols (alcoholysis), or other esters (interesterification). Compared with chemical processes already carried out on an industrial scale enzymic reactions occur under milder (and ‘greener’) conditions though they may take longer. Of greater significance is the specificity shown by the enzymes which permits the formation of lipid derivatives not easily prepared by conventional laboratory procedures. This review describes the lipases and their various specificities and reports on their use in hydrolysis and in the production of phospholipids, fatty acids, alkyl esters, mono- and di-acylglycerols, triacylglycerols, other esters, and amides. Some of these have already led to marketable products but for the most part the full potential of these reactions has yet to be realised. The reactions of other enzymes promoting interesting reactions at unsaturated centres are also described. © 1999 Society of Chemical Industry