Cyclodextrin glucanotransferase (CGTase) is an important industrial enzyme which is used to produce cyclodextrins. CGTase genes from more than 30 bacteria have been isolated and several of the enzymes have been identified and biochemically characterized. For a better understanding of the reaction mechanism and function of CGTase, the enzyme has been analyzed at gene level and protein level with regard to its structure and the similarity of different CGTase subgroups. The biological role of the enzyme is proposed based on the genetic and enzymatic analyses. Methods to enhance the production of active CGTase by bacteria are compared. The enzyme can be applied in biotechnology for the production of cyclodextrins and oligosaccharides with novel properties.