Hydroquinone glycosides were produced by transglycosylation reactions catalyzed by cyclodextrin glucanotransferase (CGTase) from Thermoanaerobacter sp. (Toruzyme® 3.0L). The reactions were carried out in an aqueous system containing hydroquinone (HQ) and maltodextrin as acceptor and donor substrate molecules respectively. The conditions for the synthesis of hydroquinone glucoside (α-arbutin) were 9mM hydroquinone, maltodextrin (5%, w/v) in 20mM citrate phosphate buffer, pH 5.5 and 0.025mg/ml toruzyme at 40°C for 24h. The transfer efficiency of hydroquinone glycosylation was 31.8% and 29.2% respectively, when α-cyclodextrin and maltodextrin were employed as donor substrates. The major glycoside product was identified as hydroquinone-1-O-α-d-glucopyranoside (α-arbutin) on the basis of mass spectrometric, nuclear magnetic resonance analysis and component analysis of its enzymatic hydrolysates. The highest molar yield of α-arbutin (21.2%) was obtained when α-cyclodextrin was used as the donor substrate. A two step enzymatic reaction system comprising of CGTase and amyloglucosidase helped to attain a molar yield of 30% for α-arbutin. At room temperature the solubility of α-arbutin in water was determined to be 12.8g/100ml which is approximately 1.8 fold higher than that of hydroquinone.