Trypsin microencapsulated in a calcium alginate matrix was lost quickly through diffusion when the microspheres were placed in an aqueous medium. This problem was overcome by first reacting trypsin with glutaraldehyde to form cross-linkages and then incorporating the enzyme in the alginate microspheres. The performance of the cross-linked trypsin remained optimal at pH 8 while it was found to be more heat-stable and remained highly active even at 80 degrees C. Esters and amides of L-arginine were preferentially hydrolysed by the enzyme indicating that cross-linking did not adversely affect the conformation of the active site. There was a suppression in enzymatic activity when the microspheres were placed in reaction media with an increasing concentration of organic solvent such as ethanol, acetonitrile or isopropanol. However, when returned to a totally aqueous environment, the enzyme resumed its initial tryptic capability. Such a microencapsulated form of cross-linked enzyme may find application in enzyme replacement therapy, optical resolution of racemic compounds as well as organic synthesis in an aqueous-organic environment.