Klebsiella oxytoca JCM 1665 was subjected to extracellular rhodanese production using a submerged fermentation technique. The organism was further engineered for higher cyanide tolerance and rhodanese yield using ethylmethanesulfonate as a mutagen. Mutagenesis resulted in an improved mutant with high cyanide tolerance (100 mM) and rhodanese yield (26.7 ± 0.67 U/mL). This yield was 4.34-fold higher than the wild strain (6.15 ± 0.65 U/mL). At temperatures ranging from 30 to 80 °C, the first-order thermal denaturation constant (Kd ) for free enzyme increases from 0.00818 to 0.0333 min−1 while the immobilized enzyme increases from 0.003 to 0.0204 min−1. The equivalent half-life reduces from 99 to 21 minutes and 231 to 35 minutes, respectively. Residual activity tests were used to assess the thermodynamic parameters for both enzyme preparations. For the free enzyme, the parameters obtained were enthalpy (29.40 to 29.06 kJ.mol−1), entropy (−194.24 to −197.50 J.mol−1K−1) and Gibbs free energy (90.20 to 98.80 kJ.mol-1). In addition, for immobilized rhodanese, we obtained enthalpy (40.40 to 40.07 kJ.mol−1), entropy (−164.21 to − 165.20 J.mol−1K−1) and Gibbs free energy (91.80 to 98.40 kJ.mol−1. Regarding its operational stability, the enzyme was able to maintain 63% of its activity after being used for five cycles. Immobilized K. oxytoca rhodanese showed a marked resistance to heat inactivation compared to free enzyme forms; making it of utmost significance in many biotechnological applications.