The purpose of this work is to develop a magnetically recyclable immobilized lipase for biodiesel production to meet the need of green and clean production. To achieve this, magnetic Fe3O4 nanoparticles were encapsulated in graphene oxides (GO), and then employed as a magnetic carrier for the immobilization of lipase from Candida rugosa via the interfacial activation of enzyme on hydrophobic surfaces. By using this immobilization strategy, the activity recovery of 64.9% and enzyme immobilization efficiency of 85.5% could be achieved. The as prepared graphene oxide Fe3O4 nanocomposite (MGO) and immobilized lipase microsphere were fully characterized by means of enzyme activity assays, transmission electron microscopy (TEM), X-ray powder diffraction (XRD), X-ray photoelectron spectroscopy (XPS), Fourier transform infrared (FT-IR) spectroscopy, vibrating sample magnetometer (VSM) and nitrogen adsorption-desorption techniques. It was shown that the Fe3O4 nanoparticles were successfully encapsulated into the GO, and moreover the lipase was tethered on the magnetic support. The immobilized lipase could efficiently catalyze the transesterification of soybean oil with methanol for the production of biodiesel. With this magnetic biocatalyst, the biodiesel yield of 92.8% could be obtained at a temperature of 40 degrees C by three-step addition of methanol in a shaking water bath. The immobilized lipase could be easily recovered by using an external magnetic field, allowing for recycling of the biocatalyst five times without significant loss of its activity.