A new simple method for the preparation of chemically crosslinked chitosan beads is presented. It consists of the dropwise addition of 2-3% (w/v) low molecular weight chitosan solution in 1% (v/v) aqueous acetic acid into crosslinking solution containing 2% (w/v) glyoxal in 1% (w/v) tetrasodiumdiphosphate, pH 8.0. Immobilized viable baker’s yeast (Saccharomyces cerevisiae) could be obtained via gel entrapment within the new beads when means preventing their direct contact with soluble chitosan were provided, "disguising" the cells until gelation and crosslinking were completed. Such means included cell suspension in castor oil or mixing with carboxymethyl-cellulose powder. Application of these means was shown to be necessary, as cells exposed to soluble chitosan immediately lost their viability and glycolytic activity. Yeast disguised in castor oil was also protected from bead reinforcement by glutaraldehyde treatment, significantly strengthening bead stability while operating under acidic conditions. This capability was demonstrated by continuous ethanol production by chitosan entrapped yeast.