Cyclodextrin glucanotransferase, produced by Bacillus megaterium, was characterized, and the biochemical properties of the purified enzyme were determined. The substrate specificity of the enzyme was tested with different alpha-1,4-glucans. Cyclodextrin glucanotransferase displayed maximum activity in the case of soluble starch, with a K-m value of 3.4 g/L. The optimal pH and temperature values for the cyclization reaction were 7.2 and 60 degrees C, respectively. The enzyme was stable at pH 6.0-10.5 and 30 degrees C. The enzyme activity was activated by Sr2+, Mg2+, Co2+, Mn2+, and Cu2+, and it was inhibited by Zn2+ and Ag+. The molecular mass of cyclodextrin glucanotransferase was established to be 73,400 Da by sodium dodecyl sulfate-polyacrylamide gel electrophoresis, 68,200 Da by gel chromatography, and 75,000 Da by mass spectrometry. The monomer form of the enzyme was confirmed by the analysis of the N-terminal amino acid sequence. Cyclodextrin glucanotransferase formed all three types of cyclodextrins, but the predominant product was beta-cyclodextrin.