alpha-amylase (3.2.1.1) was solubilized in reverse micelles formed by Triton X-100 in xylene. Although the enzyme shows decrease in specific activity in reverse micellar medium, it possesses significantly high stability in comparison to bulk aqueous medium. Water/Surfactant ratio (We) was found to play a crucial role in both activity and stability of the enzyme. The optimum water/surfactant ratio for the catalytic function of an enzyme in reverse micelles is 36, while the enzyme is stable at Wo 12 for a considerably long period, and at Wo above 20 the enzyme gets inactivated within a day. Glycerol and CaCl2 improve the stability in both aqueous and reverse micellar medium. Thus the interior of the reverse micelles acts as a microreactor and provides favorable environment for the enzyme activity and stability.