A beta-lactamase-free penicillin amidase from Alcaligenes sp. active against various beta-lactams was purified to homogeneity. The enzyme can hydrolyze penicillin G to 6-amino penicillanic acid (6-APA) and furnish penicillin G from 6-APA and phenyl acetic acid by condensation. The penicillin amidase is a heterodimer of subunit masses of 63 kDa and 22 kDa, respectively. Its isoelectric point is at pH 8.5. Cephalothin was found to be the best substrate. This is a novel type II penicillin amidase which shares the properties of both type II and type III enzymes. It is thermostable and, unlike penicillin amidase from A. faecalis, its stability remains unperturbed even in presence of reductant. An inhibition study by 2-hydroxy-5-nitro benzylbromide indicated the involvement of tryptophan in catalysis by the enzyme.