In this work, the biodiesel production from soybean oil catalyzed by lipase in a hydroxyl-functionalized ionic liquid (IL), N-methyl-N-propanolpyrrolidinium bis(trifluoromethanesulphonyl)imide ([C(1)C(3)OHPyr]NTf2), was investigated. Compared with the conventional solvents (n-hexane and tert-butanol) and the dialkyl-based ILs, the use of [C(1)C(3)OHPyr]NTf2 as the reaction medium significantly improved the biodiesel yield. The biodiesel yield was greatly affected by the dosages of IL, water and enzyme, the reaction time, temperature and the methanol/oil molar ratio. The IL phase and the enzyme could be recycled by washing with water and acetone respectively at the end of reaction. The catalytic performance of the recovered lipase decreased due to the blocking of lipase active sites by impurities, nevertheless, high biodiesel yield could be obtained for the recovered lipase via prolonging the reaction time from 2 h to 6 h. (C) 2018 Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.