Biosurfactants are surface active compounds that synthesized as secondary metabolite by wide range of bacteria and have characteristic in lowering surface and interfacial tension. This study aimed to isolate and identify biosurfactant producing bacteria from rag layer crude oil emulsion. Rag layer is considered as undesirable material as it is difficult to be separated because of the stable interaction between different components. Mineral salt medium supplemented with glucose and crude oil was used to screen the ability of isolates to produce biosurfactant. Five bacterial strains that successfully isolated from rag layer crude oil emulsion sample were screened for hydrocarbon degradation and biosurfactant production. Two isolates shown positive results in drop collapse test, surface tension measurement and emulsification index, namely P3b and P4. 16S rRNA analysis revealed P3b and P4 to be closely related to Enterobacter xiangfangensis while P4 was Shewanella chilikensis, respectively. Only isolate P3b was selected for further study. Enterobacter xiangfangensis SSP3b16 was found to grow optimally at 37°C, pH 7.0 and 10mM glucose. The highest reduction of surface tension was recorded when culture medium supplemented with 7 (v/v) glucose and 2 g/L ammonium nitrate. From this study, the biosurfactant production by Enterobacter xiangfangensis SSP3b16 can potentially be exploited to enhance oil recovery as well as in solving the rag layer problem in oil industries. © 2019 Penerbit UTM Press.