Microbiological conversion of sterols to 17-ketosteroids has been recognized as a source for commercial preparation of steroidal drugs. In order to develop bacterial strains and process with Brevibacterium lipolyticum IAM 1398 capable of converting cholesterol to 1,4-Androstadiene-3,17-dione (ADD) at about 27% yield, we studied on strain improvement, fermentation condition and whole cell immobilization. By using UV and/or NTG as mutagens, a mutant to convert cholesterol to ADD with higher yield than 60% was selected. Better production of ADD was manifested in the case of maltose used as a supplemental carbon source, and yeast extract or soytone as a nitrogen source. Addition of tween 80 (0.05%) as a surfactant beneficial for increasing the productivity. The optimal initial pH of the medium was 6.5 and optimal culture temperature was $30^{circ}C$. Whole cell immobilization by using carrageenan, agar, alginate and acrylamide was carried out and the activity of conversion was tested. In the case of carrageenan and agar, immobilized cells were active for at least two cycles of fermentation.