The influence of Paecilomyces japonica pellet morphology on fermentation broth rheology and exo-biopolymer production was investigated in a 5-l jar fermenter. Rapid formation of pellets was observed after the first day of fermentation; and these slowly increased in size and roughness. This, together with the increase in biomass concentration, altered the transport characteristics and broth rheology towards a pseudoplastic nature which, in turn, influenced cell growth and exo-biopolymer production. At mild agitation high aeration and optimum substrate concentration, pellets were the most predominant morphological form, compared with free mycelia. The broth rheology showed pseudoplastic behavior; and the fungal morphology was closely related to the rheological properties.