The indigenous microbial community utilizing aliphatic, aromatic, and polar components from the oily sludge as sole source of carbon and energy was selected from the soil samples of Ankleshwar, India for biosurfactant production. Evaluation of biosurfactant production was done using screening assays such as surface tension reduction, hemolytic activity, emulsification activity, drop-collapse assay, and cell surface hydrophobicity studies. Maximum biosurfactant (6.9 g/l) production was achieved after 5 days of growth from Bacillus subtilis DSVP23 which was identified by 16S RNA technique (NCBI GenBank accession no. EU679368). Composition of biosurfactant showed it to be lipopeptide in nature with 15.2% protein content and 18.0% lipid content. Functional group analysis was also done by using Fourier transform infrared spectroscopy which showed it to be a protein-bound lipid thereby imparting them special properties. Analysis by matrix-assisted laser desorption/ionization time-of-flight mass spectrometric and nuclear magnetic resonance revealed that the major constituents of lipopeptide are leucine and isoleucine. Gas chromatographic analysis data indicated that oily sludge components of chain length C-12-C-30 and aromatic hydrocarbons were degraded effectively by B. subtilis DSVP23 after 5 days of incubation. These results collectively points toward the importance of B. subtilis DSVP23 as a potential candidate for bioremediation studies.