The pPA102 plasmid, containing the penicillin acylase gene (pac) under the regulation of the lacZ gene promoter was constructed and used to transform E. coli JM101. Batch cultures of the recombinant strain were performed to characterize the kinetics of growth, substrate consumption, and penicillin acylase (PA) production under different induction conditions. A saturation type behaviour of PA activity with respect to the inducer (isopropyl-beta-thio-galactopyranoside (IPTG)) concentration was observed. No detrimental effect of recombinant protein expression was noted on growth rate, maximum protein and cell concentration, and glucose specific consumption rate. A simplification of an existing mechanistic kinetic model was used to describe the specific PA production rate, which exhibited a maximum at intermediate growth rates. Induction during inoculation resulted in the highest penicillin acylase activity compared to induction during later growth phases. Accumulation of PA precursor protein suggests that postranslational processing and translocation through the cytoplasmic membrane limit PA production.