Recombinant Escherichia coli BL21 (DE3) harbouring plasmid pET36 encoding D-hydantoinase from Pseudomonas putida were used as biocatalyst for the production of N-carbamoyl-D-hydroxyphenylglycine from DL-p-hydroxyphenylhydantoin. The optimum D-hydantoinase activity was observed at 40 degrees C and pH 8.5. At a substrate concentration of 300 mg/l, an initial reaction rate of 24.52 mM/h g cells was obtained and 91% of the substrate was converted into product after a 24-h reaction. Recombinant cells were immobilized within calcium alginate beads with diameters ranging from 2 to 3 mm. The specific activity of the immobilized cells increased with cell loads, probably due to reduced mass transfer resistance. The immobilized cells also exhibited an optimal pH of 8.5. However, under the conditions described above, the initial reaction rate with the immobilized cells as the biocatalysts was reduced by 87% to 3.19 mM/h g cells, probably due to the formation of cell aggregates inaccessible to substrate. Thermostability and reusability of D-hydantoinase were increased upon immobilization. The initial reaction rate with immobilized cells was increased with temperature at least up to 60 degrees C. More than 95% of the D-hydantoinase activity was recovered after three cycles for the immobilized cells, compared to 22% for the free cell systems.