Permeabilization of the cells of E. coli with N-cetyl-N, N, N-trimethylammoniumbromide (CTAB) showed 40% increase in penicillin G acylase activity. The treated cells were immobilized in porous beads of gelatin cross-linked with glutaraldehyde. Upon entrapment the catalytic properties of enzyme were changed as compared to non-immobilized form. Hydrolysis of penicillin G by immobilized system showed 60% conversion of substrate to 6-aminopenicillanic acid in batch system, whereas in continuous system, the conversion rate was 85%. The immobilized form of whole cell penicillin acylase showed low K-m toward penicillin G as a substrate.