A method for catalyst development has been suggested for immobilizing whole E. coli cells containing penicillin amidase. Conventional methods have limitations, such as permeation of substrate and product through cellular membranes, leaching of protein and other cellular components into the reaction phase, lower specific activity compared to immobilized enzyme system, etc. The whole cell immobilization technique has been optimized for different process parameters. The most suitable conditions for this process were pH, 4.25; cell concentration, 3.75%; concentration of glutaraldehyde, 1.5%; level of bovine serum albumin as additional support, 2 mg ml-1. The reaction was continued for 2 h. The granular catalyst has good mechanical strength, low protein leachability, and high retention of penicillin amidase activity. © 1991.