Physiological characteristics such as specific productivity, morphology of Streptomyces cells immobilized on celite beads, and operational stability at different dilution rates were investigated in continuous immobilized-cell cultures for the production of kasugamycin. At a dilution rate (D) of 0.05 h-1, a relatively high specific productivity was attained and the loss of cell-loaded beads was negligible. At D=0.1 h-1, a higher specific productivity and cell concentration could be obtained, resulting in a significantly improved volumetric kasugamycin productivity. However, no stable operation could be maintained due to a significant loss of cell-loaded beads from the reactor that was caused by their fluffy morphology developed in the later stage. At D=0.2 h-1, the production of kasugamycin and cell growth were observed to be severely inhibited by the high concentration of residual maltose.