A continuous stirred tank membrane reactor(CSTMR ) was developed and optimized for the production of cod skin gelatin hydrolyzates using endo-protease Alcalase. A experimental design methodology was used to optimize the four performance variables: enzyme concentration, substrate concentration, permeate flux and reactor volume. All four variables studied had an effect on substrate conversion, with enzyme and substrate concentrations being predominant. Conversion increased with the increase in enzyme concentration, with the decrease in substrate concentration, at high volumes and low flux. A strong interaction was observed between enzyme and substrate concentrations and smaller interactions between enzyme and flux and substrate and flux. The optimum operating conditions for the CSTMR process for an initial substrate concentration for 10% were $50^{circ}C$, pH 8, flux 7.3ml/min, residence time 82 min, and Alcalase to substrate ratio 0.02(w/w). A gradual decay in reactor activity during 8 hrs was 2.1% conversion/hr. Enzyme leakage through the 10, 000 MWCO membrane was 16% at $50^{circ}C$ and 12% at $35^{circ}C$, 6hrs. However, there was no apparent correlation between enayme leakage and substrate conversion. The Km value for the CSTMR was 20 times higher than the batch reactor. The productivity(expressed as mg product/mg enzyme) of the CSTMR was more than six fold higher than the batch at $50^{circ}C$. The hydrolyzate was non-bitter.