The penicillin G amidase (PGA) activity of a parent strain of E. coli (PCSIR-102) was enhanced by chemical mutagenization with N-methyl-N¢-nitro-N-nitrosoguanidine (MNNG). After screening and optimization, a penicillinase deficient mutant (MNNG-37) was isolated and found effective for the production of penicillin G amidase as compared to the parent strain of E. coli (PCSIR-102). Penicillin G amidase activity of MNNG-37 appeared during an early stage of growth, whereas PCSIR-102 did not exhibit PGA activity due to the presence of penicillinase enzyme which inhibits the activity of enzyme PGA. However, MNNG-37 gave a three-fold increase in enzyme activity (231 IU mg )1 ) as compared to PCSIR-102 (77 IU mg )1 ) in medium containing 0.15 and 0.1% concentrations of phenylacetic acid, respectively which was added after 6 h of cultivation. The difference in K m values of the enzyme produced by parent strain PCSIR-102 (0.26 mM) and mutant strain MNNG-37 (0.20 mM) is significant (1.3-fold increase in K m value) which may show the superiority of the latter in terms of better enzyme properties.