As the first step for the application of nicotinamidase (EC 3.5.1.19) to construct nicotinamide specific biosensor for nicotinamide determination or to prepare bioreactor for nicotinic acid production or to know the regulatory mechanism in niacin metabolism, the properties of the enzyme from Flammulina velutipes were investigated with dialyzed cell-free extract which had very high specific activity. As the results, the following properties of the enzyme were found: optimum pH for the reaction, 7.3; the temperature at which the maximum velocity was attained, 45℃; activation energy, 10.96 kcal/mol; Km value for nicotinamide, 1.4μM; inhibitors which inhibited more than 50% at 1mM, nicotinaldehyde, 3-cyanopyridine, nicotinic acid hydrazide, pyrazinamide, benzamide (all these are competitive inhibitors, Ki=0.2μM-0.6mM), nicotinic acid (product inhibition), heavy metal ions, NADP, NaAD, NAD, NMN; reverse reaction, not detectable. The possibility for application of this enzyme to biosensor or bioreactor is suggested.