Microbial degradation of hydrocarbons is found to be an attractive process for remediation of contaminated habitats. However the poor bioavailability of hydrocarbons results in low biodegradation rates. Cyclodextrins are known to increase the bioavailability of variety of hydrophobic compounds. In the present work we purified the Cyclodextrin Glucanotransferase (CGTase) enzyme which is responsible for converting starch into cyclodextrins and studied its role on biodegradation of diesel oil contaminated soil. Purification of CGTase from Enterobacter cloacae was done which resulted in 6 fold increase in enzyme activity. The enzyme showed maximum activity at pH 7, temperature $60^{circ}C$ with a molecular weight of 66 kDa. Addition of purified CGTase to the treatment setup with Pseudomonas mendocina showed enhanced biodegradation of diesel oil ($57{pm}1.37%$) which was similar to the treatment setup when added with Pseudomonas mendocina and Enterobacter cloacae ($52.7{pm}6.51%$). The residual diesel oil found in treatment setup added with Pseudomonas mendocina at end of the study was found to be $73{pm}0.21%$. Immobilization of Pseudomonas mendocina on alginate containing starch also led to enhanced biodegradation of hydrocarbons in diesel oil at 336 hours.