Esterases catalyze the hydrolysis of ester bonds in fatty acid esters with short-chain acyl groups. In the present study, thirty-seven bacterial isolates were isolated from soil contaminated with waste cooking oil, dairy waste etc. from Shimla and Solan district of H.P. Out of 37 isolates, the isolate RL-1, which gave maximum activity, was identified as Bacillus licheniformis MH061919. The optimization of various production parameters resulted in maximum activity at inoculum age of 24 h and inoculum size of 1.5% (v/v). Esterase gave considerable activity in production medium containing sodium chloride (0.5 % w/v), galactose (1%, w/v), coconut oil (2.0%, v/v) and beef extract (0.3%, w/v) at a temperature of 45℃ and pH 8.5.The enzyme production was enhanced by 3-fold after optimization of production parameters. Further, on optimizing reaction conditions, enzyme gave maximum activity at a temperature of 45℃ and pH 8.5. The para-nitrophenyl acetate (p-NPA) was found to be optimum substrate and metal ions and detergents have inhibitory effect on esterase activity.