Abstract A microorganism capable of producing extracellular cyclomaltodextrin glucanotransferase (E.C.126.96.36.199; CGTase) was isolated and identified as Klebsiella oxytoca. Properties of the CGTase and the optimal conditions for production of α-cyclodextrin were also studied. The most effective carbon sources for inducing the production of CGTase were amylopectin and soluble starch, whereas monosaccharides, disaccharides, and amylose did not induce CGTase. The optimal conditions for production of α-cyclodextrin were as follows: 10% (w/v) corn starch; ratio of CGTase to corn starch, around 10 units g -1 substrate; pH 6.0; 40°C; 19 h. The most important property of the CGTase was its ability to produce large amounts of almost exclusively α-cyclodextrin from starch in a short reaction time without the aid of solvents or detergents. Under optimal conditions, cyclodextrins were produced up to 14.75 g l -1 in 19 h, and the ratio of cyclodextrins produced was α: β: γ = 96.5:3.5:0.