Bacillus licheniformis K125, isolated from an oil reservoir, produces an effective bioemulsifier. The crude bioemulsifier showed 66% emulsification activity (E(24)) and reduced the surface tension of water from 72 to 34 mN/m. It contains substantial amount of polysaccharide, protein and lipid. This bioemulsifier is pseudoplastic non-Newtonian in nature. It forms oil in water emulsion which remains stable at wide range of pH, temperature and salinity. It gave 43+/-3.3% additional oil recovery upon application to a sand pack column designed to simulate an oil reservoir. This is 13.7% higher than that obtained from crude lipopeptide biosurfactants produced by the standard strain, Bacillus mojavensis JF2 and 8.5% higher than hot water spring isolate, Bacillus licheniformis TT42. The increased oil recovery obtained by using the crude bioemulsifier can be attributed to its combined surface and emulsification activity. Its mechanism of oil recovery must be similar to the mechanism exhibited by surfactant-polymer flooding process of chemical enhanced oil recovery.