D-amino acid oxidase(DAO) is an intracellular enzyme in Trigonopsis variabilis FA10. The whole cells of yeast exhibited very low DAO activity. Various treatment with physical and chemical agents, such as, freezing and thawing, acetone, butanol and cetyltrimethylammoinium bromide altered membrane permeability and increased cellular DAO activity. It was demonstrated that the performance of acetone was dependent on the concentration of the solvent, the incubation time and the temperature. Maximum enzyme activity of the cells was achieved with 30-35% acetone, between 4 degrees C and 28 degrees C. The process was very quick and permeabilization occurred in 5 minutes or less. On the other hand, the thermostability of DAO in permeabilized cells was higher than in cell extract. It was proved that Cephalosporin C could be effectively converted to glutaryl-7ACA by permeabilized Trigonopsis variabilis cells with 83% yield.