The aim of this study was to isolate and select lipase producing bacteria from effluent waste of paint industry. Five lipase producing Gram negative bacterial isolates showed promising extracellular lipase activity. Molecular identification on the basis of 16S rDNA identified bacterial isolates as Aeromonas sp. Sh 2 (KT186103.1), Aeromonas sp. Sh 8 (KT229540.1), Aeromonas sp. Sh 12 (KT427918.1), Pseudomonas sp. Sh 13 (KT251204.1), Pseudomonas sp. Sh 17 (KT251205.1). Phylogenetic analysis revealed that all the three Aeromonas spp. and two Pseudomonas spp. are highly divergent within each group. Effect of various physio-chemical parameters showed that pH 7.0 and temperature 37°C were favourable for lipase production in all five isolates. Glucose in combination with peptone enhanced the lipase activity from 1359 to 2347 Umg-1 in Aeromonas sp. Sh 2. Combination of glucose with yeast extract improved the lipase activity of Aeromonas sp. Sh 8 from 1641 to 2674 Umg-1, whereas glucose with casein hydrolysate increased the lipase activity of Aeromonas sp. Sh 12 from 1568 to 1983 Umg-1. Pseudomonas sp. Sh 13 and Pseudomonas sp. Sh 17 did not show enhanced lipase activity in presence of different carbon or nitrogen sources. These bacterial isolates could be exploited to treat oil and paint based industrial effluents and contribute to reduce environmental hazards.