Screening of a gene library from Paenibacillus sp. PBS-2 generated in Escherichia coli led to the identification of a clone with lipolytic activity. Sequence analysis showed an open reading frame encoding a polypeptide of 378 amino acid residues with a predicted molecular mass of 42 kDa. The esterase displayed 69% and 42% identity with the putative ${eta}$-lactamases from Paenibacillus sp. JDR-2 and Clostridium sp. BNL1100, respectively. The esterase contained a Ser-x-x-Lys motif that is conserved among all ${eta}$-lactamases found to date. The protein PBS-2 was produced in both soluble and insoluble forms when E. coli cells harboring the gene were cultured at $18^{circ}C$. The enzyme is a serine protein and was active against p-nitrophenyl esters of $C_2$, $C_4$, $C_8$, and $C_{10}$. The optimum pH and temperature for enzyme activity were pH 9.0 and $30^{circ}C$, respectively. Relative activity of 55% remained at up to $5^{circ}C$ with an activation energy of 5.84 kcal/mol, which indicates that the enzyme is cold-adapted. Enzyme activity was inhibited by $Cd^{2+}$, $Cu^{2+}$, and $Hg^{2+}$ ions. As expected for a serine esterase, activity was inhibited by phenylmethylsulfonyl fluoride. The enzyme was remarkably active and stable in the presence of commercial detergents and organic solvents. This cold-adapted esterase has potential as a biocatalyst and detergent additive for use at low temperatures.