Theanine (γ-glutamylethylamide) is the main amino acid component in green tea. The demand for theanine in the food and pharmaceutical industries continues to increase because of its special flavour and multiple physiological effects. In this research, an improved method for enzymatic theanine synthesis is reported. An economical substrate, glutamic acid γ-methyl ester, was used in the synthesis catalyzed by immobilized Escherichia coli cells with γ-glutamyltranspeptidase (GGT) activity. The results show that GGT activity with glutamic acid γ-methyl ester as substrate was about 1.2-folds higher than that with glutamine as substrate. Reaction conditions were optimized by using 300 mmol/l glutamic acid γ-methyl ester, 3,000 mmol/l ethylamine, and 0.1 g/ml of immobilized GGT cells at pH 10 and 50°C. Under these conditions, the immobilized cells were continuously used ten times, yielding an average glutamic acid γ-methyl ester to theanine conversion rate of 69.3%. Bead activity did not change significantly the first six times they were used, and the average conversion rate during the first six instances was 87.2%. The immobilized cells exhibited favourable operational stability.