Methanol is a versatile compound that can be biologically synthesized from methane (CH4) by methanotrophs using a low energy-consuming and environment-friendly process. Methylocella tundrae is a type II methanotroph that can utilize CH4 as a carbon and energy source. Methanol is produced in the first step of the metabolic pathway of methanotrophs and is further oxidized into formaldehyde. Several parameters must be optimized to achieve high methanol production. In this study, we optimized the production conditions and process parameters for methanol production. The optimum incubation time, substrate, pH, agitation rate, temperature, phosphate buffer and sodium formate concentration, and cell concentration were determined to be 24 h, 50% CH4, pH 7, 150 rpm, 30°C, 100 mM and 50 mM, and 18 mg/ml, respectively. The optimization of these parameters significantly improved methanol production from 0.66 to 5.18 mM. The use of alginate-encapsulated cells resulted in enhanced methanol production stability and reusability of cells after five cycles of reuse under batch culture conditions.