Soap is made of a mixture of lye and water with fats or oil through a complex chemical procedure. Lye which is also known as sodium hydroxide (a base) converts Fats or Oil (an acid) to soap; and this process is called saponification. When oil or fats come into contact with the lye or sodium hydroxide, the saponification process begins whereby lye turns the oil or fat into a completely new substance that we know as soap.