The diauxie phenomenon in Escherichia coli B entrapped in kappa-carrageenan was examined in a synthetic medium containing glucose and lactose as carbon source. Unlike in free cells, diauxie in the immobilized cells depended on the cell concentration in the gel beads. At a low cell concentration in the beads, lactose in the medium containing both sugars was not utilized until the glucose was consumed. At a high cell concentration, however, both sugars were utilized at the same time even when glucose remained in the culture medium. This suggests that the glucose concentration in the gel beads was low enough for the induction of lactose assimilation. These results are explained in terms of catabolite repression and the diffusion of the sugars.