Extensive screening resulted in the isolation of Bacillus sp. from Banana peel that produces considerable amount of thermostable levansucrase of molecular size 52kDa. 16S rRNA sequence analysis suggests that it belongs to Bacillus subtilis and was designated as strain BB04. Levansucrase was sucrose inducible, showed optimum activity at 50°C and pH 6.0. It was stable at pH range 6.0 - 7.0. Ca2+ at 1.0 mmol-1 concentration enhanced levansucrase activity by 24%. However levan production was highest at 40°C and pH 6.0. Cane molasses and juice proved to be good sources of sucrose for levan production. B. subtilis BB04 produced relatively more levan using cane molasses (11.32 gl-1) as sucrose source than in cane juice (4.81 gl-1).