Abstract: The present paper describes the preparation and properties of the encapsulated Arthrobacter simplex cells by liquid surfactant membrane which catalyzes the transformation of biger steroid molecule,i.e.,cortisol into prednisolone.The experimental results indicated that the catalytic transformation took place very well and in some systems the encapsulated cells kept the initial rate of catalytic transformation as good as that of the free cells.The stability of storage is raised by encapsulation.We also investigated various factors which affect the biocatalytic transformation from which we know that the encapsulated cell system is not influenced by the contamination of Bacillus cells which inhibit the free cell system seriously.