The ability of catalyzing indole into indigo of gene engineering strain expressing P450 BM3 immobilized by entrapment in calcium-alginate gel capsules was examined, and various characteristics of immobilized cells were assessed. Optimum conditions for cells activity were not affected after immobilization, and pH and temperature for both free and immobilized cells were found to be pH 7.5 and 35 degrees C, respectively. The immobilized cells exhibited a markedly improved thermal stability than free cells. After five repeated experiments, the yield of indigo with the immobilized cells retained over 94% of their original activity, which indicated that the operational stability for recycling in batch processes was improved.