Methanol is regularly used as a substrate for biodiesel synthesis. Excess methanol can however inhibit the lipase activity. In the present work, the activity and conformational changes of Yarrowia lipolytica lipase (LIP2) at different concentrations of methanol were investigated by measuring fluorescence, UV-vis spectra, and molecular dynamics simulations. The lipase tended to expand at higher concentrations of methanol, and the methanol molecules were able to enter into the LIP2, leading to microenvironment changes around the aromatic amino acids. More hydrophobic groups were exposed to the solvents at high methanol concentrations, and the original hydrophobic interaction in the protein was destroyed, thus resulting in the tertiary structure change of the lipase.