The influence of pellet morphology of Paecilomyces japonica on fermentation broth theology and exo- biopolymer production: was investigated. The substrate concentration was varied between 20 and 80 g/liter while running the fermentation at a high aeration of 3 vvm. The specific growth rate of Paecilomyces japonica and exo-biopolymer production was found to be optimum with a substrate concentration of 40 g/liter of sucrose. Rapid formation of pellets was observed after the first day of fermentation, which slowly increased in size, hairiness and roughness. This, together with the increase in biomass concentration, altered the transport characteristics and the broth theology to pseudoplastic nature, in turn, influenced exo-biopolymer production. At mild agitation, high aeration and optimum substrate concentration, pellets were the most predominant morphological form compared to free mycelia. Compact pellets with least hairiness and roughness, which improved the flow characteristics of the fermentation broth were observed at 40 g/liter of sucrose and hence regarded as the most productive morphological form.