Selective production of fragrance fatty acid ester from isopropanol and acetic acid has been achieved using silica-immobilized lipase 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 of biocatalyst (25-125 mg/mL), reaction time, reaction temperature, organic solvents, molecular sieves, and initial water activity were studied for optimal ester synthesis. Under optimized conditions, 66.0 mM of isopropyl acetate was produced when isopropanol and acetic acid were used at 100 mM: 75 mM in 9 h at 55°C in n-heptane under continuous shaking (160 rpm) using bound lipase (25 mg). Addition of molecular sieves (3 Å × 1.5 mm) resulted in a marked increase in ester synthesis (73.0 mM). Ester synthesis was 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.