Enzymatic ethanolysis of fish oil with immobilized lipase was investigated for reducing the free fatty acid contents and enhancing the function of fish oil. Ethanolysis reactions were carried out in erlenmeyer flask (25ml) containing a mixture of squid viscera oil and 99.9% ethanol using 1% (based on w/w squid viscera oil) immobilized lipase. The reaction mixtures were incubated at $50^{circ}C$ and shaken at 100rpm. Ethanol was added into the mixture by stepwise addition method of Shinmada[9]. Measurement of free fatty acid molar amounts was studied by Acid Value. Tendency of oil variation during transesterification was studied by TLC method. Enzymatic ethanolysis composed diglyceride, monoglyceride and fatty acid ethyl ester with reducing free fatty acid contents. Also, selective ethanolysis by Lipozyme TL-IM and Lipozyme RM-IM mostly did not react at the sn-2 position of squid viscera oil. Lipozyme RM-IM was more suitable enzyme to reduce the free fatty acid contents by ethanolysis than Lipozyme TL-IM. Squid viscera oil was transformed into suitable properties (5 in Acid Value) for functional fish oil production.