An improved fluorometric assay for determining the activity of the microbial transglutaminase (TGase) in the culture medium samples has been developed. The assay procedure measures the fluorescence enhancement due to the incorporation of monodansyl cadaverine (Substrate A) into pentafluorophenylester of CBZ-Gln-Gly (Substrate Q) at exc. 260 nm and em 538 nm. The effect of the competitive inhibitors in the culture medium samples on TGase activity was determined. The assay was combined with HPLC method for determining enzyme activity as an international unit (IU). Enzymatic reaction was monitored by HPLC and the rate of product formation was measured via amine substrate consumption rate. A conversion factor was obtained using HPLC and fluorescence spectrophotometer data together. This was formulated for quantification of TGase activity as IU using fluorometric assay reported in this study. The detection limit of the assay was determined as 0.0014 IU (0.5 mg). TGase activity remained linear upto the enzyme concentraion of 20 mg. This technique dramatically decreases the incubation time of enzyme to a few minutes of activity measurement.