An extracellular tannase (tannin acyl hydrolase) was isolated from Paecilomyces variotii and purified from cell-free culture filtrate using ammonium sulfate precipitation followed by ion exchange and gel filtration chromatography. Fractional precipitation of the culture filtrate with ammonium sulfate yielded 78.7% with 13.6-folds purification, and diethylaminoethyl-cellulose column chromatography and gel filtration showed 19.4-folds and 30.5-folds purifications, respectively. Molecular mass of tannase was found 149.8 kDa through native polyacrylamide gel electrophoresis (PAGE) analysis. Sodium dodecyl sulphate-PAGE revealed that the purified tannase was a monomeric enzyme with a molecular mass of 45 kDa. Temperature of 30 to 50 degrees C and pH of 5.0 to 7.0 were optimum for tannase activity and stability. Tannase immobilized on alginate beads could hydrolyze tannic acid even after extensive reuse and retained about 85% of the initial activity. Thin layer chromatography, high performance liquid chromatography, and H-1-nuclear magnetic resonance spectral analysis confirmed that gallic acid was formed as a byproduct during hydrolysis of tannic acid.