Mycelia of Claviceps purpurea CBS 164.59 were immobilized in 2%, 4%, and 8% calcium alginate. Alkaloid production by free cells declined after 60 days, while immobilized cells retained their activity for 200 days. The cumulative alkaloid production for all fermentation cycles using 8% calcium alginate immobilized mycelia was 25 times higher than that from free cells. The best yields of the ergopeptide ergometrine were reached with 4% gel immobilized mycelia, while higher gel concentrations caused a shift in the alkaloid biosynthesis towards high clavine alkaloid production. Beginning with the third cycle of reincubation the immobilized mycelia showed a marked tendency to fragmentize into vacuolated arthrosporoid-like structures and produced violet-black pigments so that the beads recalled sclerotial structures of parasitically living Claviceps.