In vitro transformation of ampicillin to cephalexin was studied using calcium alginate-immobilized and free Streptomyces sp. strain DRS-1 packed in glass columns. Tris-HCl buffer containing ampicillin was continuously circulated through the columns for four cycles, each cycle (with fresh ampicillin) being continued for 5 h. The pattern of product formation was identical in both cases, i.e. in each cycle, after reaching a certain concentration, its formation did not increase. Product formation was always higher with immobilized cells. Conversion of ampicillin to cephalexin by the strain was affected by cell and substrate concentration.