Aerobic cultures of an actinomycete were found to produce penicillin V acylase (PVA) (PA, EC-3.5.1.11) extracellularly. The presence of L-2-3 diamino-propionic acid in cell wall and formation of sclerotia on culture media led to its identification as Chainia, a sclerotial Streptomyces. Partially purified acylase was adsorbed on kieselguhr and entrapped in polyacrylamide gel. The immobilized preparation proved effective with respect to retention of enzyme and enzyme activity even after 15 successful cycles. The pH optimum for crude enzyme was in the range of pH 7.5-8.0, and for the (NH4)2 SO4 fraction it was pH 8.5. The immobilized enzyme showed maximal activity at pH 9.5. The optimum temperature for acylase activity was at 55 degrees C. The crude enzyme, ammonium sulfate fraction, and immobilized enzyme showed Km value for penicillin V of 6.13 mM, 14.3 mM, and 17.1 mM, respectively.