Production of cyclodextrins (CDs) by immobilized cells of the alkaliphilic Bacillus agaradhaerens LS-3C with integrated product recovery was studied. The microorganism was entrapped in polyvinyl alcohol-cryogel beads and used as a convenient source of immobilized cyclodextrin glycosyltransferase (CGTase). On activation by incubation in the cultivation medium containing 1% (w/v) starch, the entrapped cells multiplied and secreted CGTase with an activity of 2-3 mg beta-cyclodextrin h(-1) g(-1) beads. The immobilized biocatalyst exhibited maximum activity at pH 9 and 50degreesC, and formed cyclodextrins comprising 92-94% beta-CD and remaining alpha-CD. The cyclodextrin product from the immobilized cell bioreactor was continuously recovered by adsorption to Amberlite XAD-4 in a recycle batch mode. The product adsorption was facilitated at low temperature while hot water was used for elution.