A bacterial strain CFCl, which produced an extracellular cycloinulooligosaccharide fructanotransferase(CFTase), was isolated from soil. The isolated strain was identified as a strain of Bacillus sp. The synthesis of CFTase by the bacterium was found to be induced by inulin which was added to the culture medium as a carbon source. The highest activity of CFTase was observed at pH 7.5 and $37^{circ}C$ in the medium containing 4% inulin and 0.5% peptone as a carbon source and a nitrogen source, respectively. Under the optimal conditions, the enzyme activity in the culture supernatant reached the highest level of 85 munits/ml after 96 h cultivation.