Encystment of Azotobacter nigricans was induced by its diazotrophic cultivation on kerosene. Its growth and nitrogenase activity were affected by kerosene in comparison to cultures grown on sucrose. Electron microscopy of vegetative cells showed that when nitrogenase activity was higher and the poly-beta-hydroxybutyrate granules were not present to a significant extent, peripheral bodies were abundant. After 8 days of culture on kerosene, the presence of cysts with intracellular bunches of poly-beta-hydroxybutyrate granules was observed. Germination of cysts bears germinating multicelled yet unbroken capsule cysts with up to three cells inside. This is the first report of encystment induction of Azotobacter species grown on kerosene.