The influence of internal mass transfer on productivity as well as the performance of packed bed bioreactor was determined by varying a number of parameters; chitosan coating, flow rate, glucose concentration and particle size. Saccharomyces cerevisiae cells were immobilized in chitosan and non-chitosan coated alginate beads to demonstrate the effect on particle side mass transfer on substrate consumption time, lag phase and ethanol production. The results indicate that chitosan coating, beads size, glucose concentration and flow rate have a significant effect on lag phase duration. The duration of lag phase for different size of beads (0.8, 2 and 4 mm) decreases by increasing flow rate and by decreasing the size of beads. Moreover, longer lag phase were found at higher glucose medium concentration and also with chitosan coated beads. It was observed that by increasing flow rates; lag phase and glucose consumption time decreased. The reason is due to the reduction of external (fluid side) mass transfer as a result of increase in flow rate as glucose is easily transported to the surface of the beads. Varying the size of beads is an additional factor: as it reduces the internal (particle side) mass transfer by reducing the size of beads. The reason behind this is the distance for reactants to reach active site of catalyst (cells) and the thickness of fluid created layer around alginate beads is reduced. The optimum combination of parameters consisting of smaller beads size (0.8 mm), higher flow rate of 90 ml/min and glucose concentration of 10 g/l were found to be the maximum condition for ethanol production.