Thirty-seven soil isolates and mutants of Azotobacter chroococcum tested for poly-3-hydroxybutyrate (PHB) production using Sudan black B staining method were found to be positive. One mutant showed a higher number of PHB-producing cells and maximum number of granules per cell. Using 2% glucose and 15 mmol/L ammonium acetate, PHB production was found to be maximum at 36 and 48 h of growth under submerged cultivation and under stationary cultivation, respectively. PHB production was found to be higher on sucrose and commercial sugar (as carbon sources) as compared to glucose and mannitol. As commercial sugar is cheaper than sucrose it was selected as carbon source for PHB production, that being found to be maximum at 1% concentration. Inorganic nitrogen sources seemed to have no stimulatory effect on the production of PHB. However, ammonium acetate (15 mmol/L) was found to be best for PHB production. Peptone (0.2%) gave a better yield of PHB under both growth conditions. Using all optimized conditions, PHB production was studied in ten selected strains. Two of them were found to be best PHB producers under both growth conditions, one producing 621 and 740 micrograms/g dry mass under submerged cultivation and under stationary cultivation, respectively, while the second one produced 589 and 733 micrograms/g.