Isolation and characterization of a p-lactamase (Ec 3.5.2.6)-free, penicillin amidase (penicillin amidohydrolase, EC 3.5.1.11)-producing organism is reported. The test strain was isolated by an enrichment technique with a substrate other than penicillins. The isolated strain belongs to the genus Alcaligenes. Phenylacetic acid was found to be the inducer of penicillin amidase, The amidase has a broad substrate spectrum, It is very active against penicillin G and semisynthetic cephalosporins, whereas penicillin V and semisynthetic penicillins acted moderately as a substrate. Immobilized cells of Alcaligenes sp. were shown to act as a reversible enzyme.