The aim of this study was to physicochemically characterize transglutaminase (TGase) from Bacillus circulans BL32, a strain recently isolated from the Amazon basin region, for its application in food systems. The effects of pH and temperature on the enzyme activity were determined by Central Composite Rotatable Design (CCRD), with maximal TGase activities obtained for pH between 5.7 and 8.7 and temperatures of 25–45 °C. This microbial TGase showed to be remarkably stable: over 90% of its activity was retained after 120 min of incubation at 50 °C. The Ca 2+ and Mg 2+ cations enhanced enzyme activity and its thermal stability when in concentrations of up to 2 and 1 mol L −1, respectively. Casein, isolated soy protein, and hydrolysed animal protein were treated with this TGase. The decrease in the amount of free amino groups, especially for casein, showed the cross-linking of protein catalysed by this enzyme, while the emulsifying properties of these proteins were improved with treatment. These results suggest that this microbial TGase has a good potential to be used in food and other industrial applications.