In order to isolate Bacillus stearothermophillus , fifty soil samples were collected from the southern region of Iraq representing five Iraqi provinces including Basrah , Thiqar , Misan , AL_Mothanna , and Karbalaa respectively . From these soil samples, fifty four local isolates were obtained and subjected to identification according to their morphological, cultural, and biochemical tests. Results showed that twenty nine of these isolates were identified as Bacillus stearothermophillus. The ability of these local isolates in lipase production was examined on LB-trybutyrin agar medium. Results showed that two of these isolates were lipase producers according to the diameters of hydrolysis zones. B.stearothermophillus BSR3 was selected for the molecular study because it was efficient in the production of thermostable lipase. In attempt to clone thermostable lipase gene of BSR3 isolate in most familiar gram negative host (E. coli), lipase gene was amplified using specific primers designed to include genetic elements upstream and downstream lipase gene located on chromosomal DNA of standard strain of B. stearothermophillus (U78785) according to the bioinformatics database available on NCBI web site . Results showed the amplified fragment was most identical (67% identity) to portion of nitrate reductase of Geobacillus sp.WCH70. As a consequence of this result new sets of primers were designed according to the complete sequence of lipase gene of Geobacillus sp.WCH70 to amplify lipase gene of BSR3 to consist of specific control sequences upstream and downstream of lipase gene. The amplified gene fragment was cloned in pPCRScriptSK (+) cloning vector and sequenced according to chain termination method. Results showed that the amplified lipase gene was identical (99% identity) to lipase gene of Geobacillus sp.WCH70. According to results of biochemical tests and DNA sequencing of lipase gene, locally isolated B. stearothermophillus BSR3 was regarded as Geobacillus stearothermophillus BSR3. To study the expression system of BSR3 lipase gene in E. coli, different strategies were designed for gene amplification to consist of open reading frame with and without control elements needed for gene expression in new host and as follows : 1. Open reading frame without both leader sequence (ll)- and stop codon (stp.cd)-, with NcoI/XhoI cohesive ends. 2. Open reading frame without leader sequence (ll)-, but with stop codon (stp.cd)+, with NcoI/XhoI cohesive ends. 3. Open reading frame with both leader sequence (ll)+, and with stop codon (stp.cd)+, with NcoI/XhoI cohesive ends. 4. Open reading frame with leader sequence (ll)+, but without stop codon (stp.cd)-, with NcoI/XhoI cohesive ends. These fragments were amplified and cloned in pPCRScript cloning vector and sequenced to determine the exact coding sequence of lipase gene in presence of control elements allows gene expression in new host in comparison with coding region of Geobacillus sp. WCH70 lipase gene, and used to transform in E.coli DH5α. Results showed that the degree of similarity of the coding sequences for these four amplified fragments with coding region of Geobacillus sp. WCH70 was 99.98% and the molecular size of each of these fragments are 721, 721, 796, and 796 bp respectively after sequencing and analyzing on agarose gel. To study the optimal gene expression of the four fragments of lipase gene these four fragments were double digested with NcoI/XhoI and NdeI/XhoI restriction enzymes respectively to generate these four fragments and subcloned in pET20b(+) expression vector , and transformed in E.coli BL21(DE3). Results showed that the clone harboring recombinant pET20b(+) containing lipase gene fragment with leader sequence(ll)+ and stop codon (stp.cd)+of native lipase gene gave maximum degree of gene expression and lipase production among other clones of genetically engineered E. coli containing other forms of lipase gene; this clone was selected to study optimum conditions for lipase production . Optimum conditions for lipase production by genetically engineered E.coli BL21(DE3) was studied under different nutritional and cultural conditions. Results showed that maximum lipase production was achieved after induction genetically engineerered E. coli BL21(DE3) with 1 mM of IPTG for 8 hours at 18Co and pH8. Expression of lipase gene under these conditions was studied by analyzing protein profile of cell fractions on SDS-PAGE. Results showed that, the approximate molecular mass of lipase enzyme was about 25 Kb with sharp protein band on polyacrylamide gel in comparison with same band of cell fractions without induction with IPTG.