The characteristics of Erwinia rhapontici cells with $alpha$-glucosyltransferase activity immobilized in Ca-alginate beads and the performance of two different types of reactor-stirred tank reactor(STR) and packed bed reactor(PBR)-charged with these immobilized cells to produce palatinose from sucrose were investigated. The optimal pH(5.5-6.0) and temperature($30-35^{circ}C$) showed no appreciable difference between free and immobilized cells. The apparent Km value of the immobilized cells(0.28M) was approximately two times higher than that of free cells(0.13M) at $30^{circ}C$. The half life of the immobilized cells was found to be 380 h with STR while much greater operational stability was achieved with PBR. Continuous operation of PBR at a space velocity of $0.2h^{-1}$ for 30 days showed only 5% loss of initial activity.