Invention relates to a Process for isolating, purifying and formulating commercial grade lutein paste from oleoresin. Process comprises dissolving oleoresin in alcohol to obtain xanthophylls esters , hydrolyzing with base, quenching, drying ester layer and finally mixing the obtained lutein crystals with non-water soluble fractions to obtain stable lutein paste. Lutein thus prepared can be made stable during storage without use of chemical additives and also available at viable prices.