The strain YL 38-3, which was capable of producing extracellular cytosine deaminase, was isolated and taxonomically examined. The isolated strain was identified to be Bacillus polymyxa YL 38-3. The optimal conditions for the enzyme production from Bacillus polymyxa YL 38-3 were investigated. The enzyme production was reached maximum level in the medium containing 0.5% glucose, 0.2% beef extract, 0.5% NaCl and 0.1% $KH_{2}PO_{4}$ (pH 6.0). And the enzyme showed the highest activity when the strain YL 38-3 was cultivated at $35^{circ}C$ for 24 gours under the initial pH 6.0. By the additions of peptone the extracellular enzyme production was inhibited, meanwhile the intracellular enzyme production was highly stimulated. It was, therefore, deduced that peptone was related to the secretion mechanism of the enzyme from this bacterial cell.