Immobilized liposome-bound cellulase (ILC) was optimally prepared for the ILC-catalyzed hydrolysis of insoluble cellulose in an external loop airlift bioreactor. The liposomes with mean diameters of 200, 100, and 50 nm were used to prepare three kinds of ILCs, i.e., ILC(200), ILC(100) and ILC(50), respectively. The activity and stability of ILC(100) were examined with soluble cellulose (CMC) in addition to the insoluble substrate of cellulose powder (CC31) in a shaking flask as well as the airlift bioreactors. The experiments were carried out with 45 degrees C and pH 4.8 being found to be optimal for the activity. The activity of ILC(100) was stable in either airlift or shaking flask bioreactor during the five times repeated hydrolyses of CC31 corresponding to a total reaction time of 240 h. This confirmed that the cellulase molecules were covalently bonded to the liposomes covalently bound to the chitosan gel beads. Nevertheless, the activity of ILC(100) with CMC steadily decreased throughout the repeated reactions, suggesting an adverse effect of CMC on the ILC(100) activity. Among the three ILCs, ILC(50) was found to be the most stable and productive biocatalyst during the repeated hydrolyses of insoluble CC31 in the airlift bioreactor. More than 70% of the initial activity of ILC(50) was retained even after the six times repeated reactions for 288 h. Conversely, the ILC(200) was found to be the most unstable catalyst. Such a difference in stability among these ILCs was suggested to be caused by the difference in physical stability of their liposome membranes to the liquid shear stress due to the rising bubbles and circulating liquid as well as that in the amount of the cellulase molecules unstably incorporated in the membranes. ILC(50) was thus shown to have the most potential for an efficient hydrolysis of insoluble cellulose in a practical airlift bioreactor.