The optimization of extracellular lipase production by Fusarium isolani strain SKWF7 isolated from dairy wastewater was carried out in this study. Initially, the physicochemical factors significantly influencing enzyme production were studied by varying one-factor-at-a-time (OFAT). A mesophilic temperature of 40°C, alkaline pH of 8, and incubation period of 72 hours were found to be the optimal conditions for lipase production. Among the media components, the disaccharide sucrose acted as the best carbon source; palm oil as the best inducing lipid substrate; casein and (NH4)2SO4 as the best organic and inorganic nitrogen sources; Ca(2+) ion as the best trace element. In the next phase of work, statistical optimization of medium components was performed by employing the Box-Behnken design of Response Surface Methodology (RSM). The optimum concentrations of three significant factors, namely, palm oil, (NH4)2SO4, and CaCO3 were determined by this method to be 5% (v/v), 5.5 g/L, and 0.1 g/L, respectively. RSM-guided design of experiments resulted in a maximum lipase production of 73.3 U/ml, which is a 1.7-fold increase in comparison with that obtained in the unoptimized medium. These results point towards the success of the model in developing a process for the production of lipase, an enzyme of enormous industrial significance.