Biocatalytic conversion of vegetable oils by immobilized lipase to fatty acid methyl ester (FAME) is an efficient eco-friendly alternative to the conventional alkaline-catalyzed biodiesel production process. In this work, immobilization of Thermomyces lanuginosus lipase on Fe₃O₄ was studied using different covalent linkage designs. Immobilization of lipase on magnetic supports was shown by Fourier-Transformed infrared microscopy and scanning electron microscopy. Immobilized lipase prepared on Fe₃O₄ carrier modified by 3-aminopropyl triethyoxysilane and covalently linked by 1-ethyl-3-(3-dimethylaminopropyl) carbodiimide and N-hydroxysuccinimide (Fe₃O₄-AP-EN-LIP) showed the highest catalytic activity on hydrolysis of p-nitrophenyl palmitate and transesterification of refined palm oil. Reaction variables were optimized by Central Composite Design, which identified 23.2% w/w enzyme loading and 4.7:1 methanol to FFAs molar ratio with 3.4% water content in the presence of 1:1 (v/v) tert-butanol to oil as optimal conditions, leading to 97.2% FAME yield after incubation at 50 °C for 24 h. The biocatalyst showed high operational stability and could be simply separated by magnetization and recycled for at least 5 consecutive batches with > 80% activity remaining, suggesting its potential for application in biocatalytic biodiesel synthesis.