Whole cells of Arthrobacter simplex were immobilized in a living state in calciumalginate gel. The bacteria showed steroid-¹-dehydrogenase activity and the production of prednisolone from cortisol was investigated. The ¹-dehydrogenase activity of the immobilized cells could be increased about ten-fold by incubation in nutrient media (e.g., containing 0.5% peptone abd 0.2% glucose). The reason for this activation was examined and it was found that the immobilized cells were capable of multiplying when supplied with nutrients. Furthermore, provided that an inducer, cortisol, was present, the steroid-¹-dehydrogenase activity increased in proportion to the increase in the number of cells and it was thus concluded that microbial growth was the cause of activation. Experiments on repeated, batch-wise pseudocrystallofermentation with immobilized A. simplex cells also showed that immobilized cells could be advantageously used for pseudocrystallofermentation of steroids.