An investigation was conducted to determine whether immobilized resting cells of Streptomyces clavuligerus NP1, entrapped on a polymeric matrix, are able to perform oxidative ring expansion of benzylpenicillin into deacetoxycephalosporin G by virtue of their deacetoxycephalosporin C synthase ("exyandase") activity. Cells entrapped in polyethyleneimine-barium alginate (1.5%) were able to sustain activity for at least four 2-h cycles, whereas free resting cells were inactive after the second cycle. Although entrapped cells exhibited lower oxidative ring expansion activity than free resting cells, immobilization may offer storage stability, recyclability, and operational stability for biotransformation of penicillins to cephalosporins, thus contributing to the development of a biological means for the production of the important industrial intermediate 7-aminodeacetoxycephalosporanic acid.