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 Introduction: Lipases are a class of hydrolases which catalyze the hydrolysis of triglycerides to glycerol and free fatty acids. Lipases have become an integral part of the modern food, detergents, cosmetics and pharmaceutical industries. The aim of this study was investigation of the effect of olive oil with different commercial purity as a substrate on lipase production by Yarrowia lipolytica. Materials and methods: One percentage of olive oil with three different commercial grades Extra-virgin, Virgin and Ordinary was used as cheap substrate to produce lipase by wild-type strain Y. lipolytica DSM3286 and mutant strain Y. lipolytica FDY139. Results: Maximum lipase activity was observed 72 hours after inoculation. The wild-type strain Y. lipolytica DSM3286 produced lipase with 56 U/ml activity on Virgin olive oil, but mutant strain Y. lipolytica FDY1390 produced lipase with 300 U/ml activity on Ordinary olive oil. Discussion and conclusion: The Y. lipolytica FDY1390 produced lipase about 5.4-fold higher than the wild-type strain on Ordinary olive oil. Whereas other expensive type of olive oil, Ordinary olive oil is a cheap oil which could be used to lipase production and optimization.