Escherichia coli NCIM 2569 was evaluated for its potential for amidase production under submerged fermentation. Among the various amide compounds screened, maximum substrate specificity and enzyme yield (8.1 U/mL) were obtained by using 1% acetamide. Fermentation was carried out at 30 degrees C in shake-flask culture under optimized process conditions. A maximum of 0.52 U/mL of intracellular amidase activity was also obtained from cells incubated for 24 h. Studies were also performed to elucidate the optimal conditions (gel concentration, initial biomass, curing period of beads, and calcium ion concentration in the production medium) for immobilization of whole cells. By using E. coli cells entrapped in alginate, a maximum of 6.2 U/mL of enzyme activity was obtained after 12 h of incubation under optimized conditions. Using the immobilized cells, three repeated batches were carried out successfully, and 85% of the initial enzyme activity was retained in the second and third batches. The study indicated that the immobilized E. coli cells offered certain advantages such as less time for maximum enzyme production, more stability in the enzyme production rate, and repeated use of the biocatalyst.