A polysaccharide-producing bacterium was isolated from cane sugar. It was identified as Bacillus circulans and produced levansucrase at pH and temperature optima of 5-7 and 40 degrees C respectively. The enzyme is extracellular and inducible with sucrose. It possesses initial hydrolytic and transferase activities that can be altered by modifying reaction conditions. Levansucrase was recovered from the fermentation broth by extraction with polyethylene glycol (1500 Da). Further purification resulted in an enzyme with a molecular mass of 52 kDa and a pI of 4.7. At high sucrose concentration (300 mM), the transferase activity but not the hydrolase activity were inhibited. Levan increased the transferase activity but had no effect on the hydrolytic activity. The levansucrase had high transferase activity with maltose, galactose and lactose and moderate activity towards sorbitol and glycerol.