Azotobacter vinelandii MTCC 2460, a novel exopolysaccharide (EPS) producer, was isolated from Nelumbium nelumbo (lotus) stem. The EPS produced has a sugar composition different from that of existing industrial gums. Optimization of the basal medium composition and other physical parameters viz. pH, temperature and time has been reported in this paper. A final yield of 30% of the amount of carbon source i.e. sucrose, supplied has been obtained in shake flask cultures, indicating the potential of the organism for production of useful EPS on a large (industrial) scale.