Unstable oil markets with rising environmental concerns have widespread interest in the production of fuel ethanol by exploiting micro-organisms strains. Ethanol is an economical and environmentally friendly liquid fuel. This research deals with application of encapsulation technology to ferment the dextrose sugar to ethanol. With a view to minimize process costs while maintaining a satisfactory ethanol yield, yeast cells for free cells and immobilized cells were tested for their fermentation abilities.