The rising trend of bioflavour synthesis by microorganisms is hindered by the high manufacturing costs, partially attributed to the cost of the starting material. To overcome this limitation, in the present study, dilute-acid hydrolysate of orange peel was employed as a low-cost, rich in fermentable sugars substrate for the production of flavour-active compounds by Saccharomyces cerevisiae. With this purpose, the use of immobilized cell technology to protect cells against the various inhibitory compounds present in the hydrolysate was evaluated with regard to yeast viability, carbon and nitrogen consumption and cell ability to produce flavour active compounds. For cell immobilization the encapsulation in Ca alginate beads was used. The results were compared with those obtained using free-cell system. Based on the data obtained immobilized cells showed better growth performance and increased ability for de novo synthesis of volatile esters of "fruity" aroma (phenylethyl acetate, ethyl hexanoate, octanoate, decanoate and dodecanoate) than those of free cells. The potential for in situ production of new formulations containing flavour-active compounds derive from yeast cells and also from essential oil of orange peel (limonene, α-terpineol) was demonstrated by the fact that bioflavour mixture was found to accumulate within the beads. Furthermore, the ability of the immobilized yeast to perform efficiently repeated batch fermentations of orange peel hydrolysate for bioflavour production was successfully maintained after six consecutive cycles of a total period of 240 h.