A cDNA gene encoding a mature peptide of the mono- and diacylglycerol lipase (abbreviated to PcMdl) from Penicillium cyclopium PG37 was cloned and expressed in Pichia pastoris GS115. The recombinant PcMdl (rePcMdl) with an apparent molecular weight of 39 kDa showed the highest activity (40.5 U/mL of culture supernatant) on 1,2-dibutyrin substrate at temperature 35°C and pH 7.5. The rePcMdl was stable at a pH range of 6.5-9.5 and temperatures below 35°C. The activity of rePcMdl was inhibited by Hg2+ and Fe3+, but not significantly affected by EDTA or the other metal ions such as Na+, K+, Li+, Mg2+, Zn2+, Ca2+, Mn2+, Cu2+, and Fe2+. PcMdl was identified to be strictly specific to mono- and diacylglycerol, but not triacylglycerol. Stereographic view of PcMdl docked with substrate (tri- or diacylglycerol) analogue indicated that the residue Phe256 plays an important role in conferring the substrate selectivity. Phe256 projects its side chain towards the substrate binding groove and makes the sn-1 moiety difficult to insert in. Furthermore, sn-1 moiety prevents the phosphorus atom (substitution of carboxyl carbon) from getting to the Oγ of Ser145, which results in the failure of triacylglycerol hydrolysis. These results should provide a basis for molecular engineering of PcMdl and expand its applications in industries.