The wine yeast Saccharomyces cerevisiae was immobilized in sodium alginate beads for production of acetic acid. In order to optimize immobilization conditions, a study was conducted using various concentrations of alginate, CaCl2, cell loading, bead diameter etc. The optimized parameters were alginate concentration 4% (w/v), CaCl2 concentration 0.3 (M), cell: alginate ratio 5:4, storage period 24 hrs. and cell bead diameter of 3 mm. In comparison to free cells (1.0678 gm/100ml), the rate of fermentation by immobilized cell proved to be greater (1.395 gm/100ml), showing suitability for acetic acid production.