The influence of substrate or product level on the initial velocity of cyclodextrin (CD) production by cyclodextringlycosyltransferase from a Brazilian isolate of Bacillus firmus was studied. Our results indicate that the product gamma-CD is a stronger inhibitor to the reaction than beta-CD. Small saccharides could also inhibit CD production, although to a lesser extent than the products, and maltose was the strongest inhibitor among small saccharides. Increasing substrate concentration resulted in greater reduction on enzyme activity for the formation of beta-CD than for gamma-CD. We modeled the kinetics of CD production with a set of four reversible reactions including the cyclization/coupling reaction that forms/opens CDs, and three disproportionation reactions. Our model on the initial velocity data explained well the substrate inhibition phenomenon. Kinetic parameters were determined by fitting the initial velocity data into our model.