An alkalophilic Bacillus firmus secreting the enzyme cyclomaltodextrin glucanotransferase was isolated from soil. The enzyme attacked raw starch to produce cyclodextrins. Maximum cyclodextrins were produced from tapioca starch followed by potato and corn starch. About 49 % of tapioca starch (at 10 and 50 g/l) was converted to cyclodextrins. The main reaction products were beta and gamma-cyclodextrins with 40 % and 8 % yield respectively. On prolonged incubation small amount of alpha-cyclodextrin was also produced. The ratio of cyclodextrins was dependent on the initial substrate concentration as well as reaction time.