Aims:  Isomaltulose (palatinose) is a slowly digestible sucrose isomer that can reduce both the glycemic and insulinemic response to foods. The aim of this study was to clone and express a sucrose isomerase (SIase) gene and characterize the protein that is responsible for the production of isomaltulose in the micro‐organism Enterobacter sp. FMB‐1. Methods and Results:  A cosmid clone containing c. 6 kbp region encoding an SIase gene was identified. The 5969‐bp chromosomal DNA fragment covering the SIase (esi) gene in Enterobacter sp. FMB‐1 was sequenced. Although this DNA fragment contained several open reading frames other than esi, only the presence of esi was sufficient to produce isomaltulose in recombinant Escherichia coli. The esi gene was expressed in E. coli, leading to the characterization of its SIase activity. Conclusions:  The Enterobacter sp. FMB‐1 esi gene was successfully cloned and expressed in E. coli. This gene encoded a functional SIase that produced isomaltulose from sucrose. Significance and Impact of the Study:  This is the first molecular analysis of an SIase gene in an Enterobacter strain. The functional expression of the Enterobacter sp. FMB‐1 esi gene in E. coli offers an alternative choice for the industrial production of isomaltulose.