The process of degradation in organochlorine insecticide lindane is greatly hindered by its high degree of hydrophobicity. In this work, the lindane-degrading yeast strain, Rhodotorula sp. VITJzN03 was found to show extracellular emulsification activity and reduction in surface tension while growing in mineral medium. The production of glycolipid biosurfactant was induced by addition of olive oil into the cultures of the yeast. Addition of olive oil increased the yield of biosurfactant to 7g/L. The biosurfactant produced was identified as a diacetyl sophorolipid by FTIR, NMR and GC-MS analysis. The purified sophorolipid had a critical micelle concentration of 110 mg/L. Induced production of sophorolipids by Rhodotorula VITJzN03, showed a positive effect on lindane degradation which was detected by the mineralization of lindane and release of chloride ion. Under the optimized growth conditions, 600 mg/L of lindane was completely mineralized with a release of 6mM of chloride ion by the end of the 5th day. The yeast cultures without olive oil showed the same result by the end of the 8th day. Therefore, it can be concluded that increased biosurfactant production could enhance lindane degradation by means of co-metabolism of olive oil.