Abstract In recent years, many efforts have been directed to explore the methods to reduce the production costs of industrial lipase by improving the yield and the use of low-cost agricultural wastes. Coconut dregs, which is a lignocellulosic by-product from coconut oil and milk processing plants, is rich in cellulose (36%) and crude fat (9%). A newly isolated Bacillus stratosphericus has been demonstrated to perform cellulose hydrolysis on coconut dregs producing fermentable sugars. The highest extracellular lipase activity of 140 U/mL has been achieved in submerged fermentation with acid pre-treated coconut dregs. The lipase was found to be active over a wide range of temperatures and pHs. The activity of lipase can be generally increased by the presence of detergent ingredients such as Tween-80, cetyltrimethylammonium bromide, hydrogen peroxide and phosphate per sulphate. The great compatibility of lipase in commercial detergents has also underlined its potential as an additive ingredient in biodetergent formulations.