A fungal strain isolated from rotten banana and identified as Aspergillus alliaceus was found capable of producing thermostable extracellular beta-galactosidase enzyme. Optimum cultural conditions for beta-galactosidase production by A. alliaceus were as follows: pH 4.5; temperature, 30 A degrees C; inoculum age, 25 h; and fermentation time, 144 h. Optimum temperature, time, and pH for enzyme substrate reaction were found to be 45 A degrees C, 20 min, and 7.2, respectively, for crude and partially purified enzyme. For immobilized enzyme-substrate reaction, these three variable, temperature, time, and pH were optimized at 50 A degrees C, 40 min, and 7.2, respectively. Glucose was found to inhibit the enzyme activity. The K (m) values of partially purified and immobilized enzymes were 170 and 210 mM, respectively. Immobilized enzyme retained 43 % of the beta-galactosidase activity of partially purified enzyme. There was no significant loss of activity on storage of immobilized beads at 4 A degrees C for 28 days. Immobilized enzyme retained 90 % of the initial activity after being used four times.