Screening of microorganisms capable of producing alginate lyase enzyme is commonly carried out by investigating their abilities to grow on alginate-containing solid media plates and occurrence of a clearance zone after flooding the plates with agents such as 10% (w/v) cetyl pyridinium chloride (CPC), which can form complexes with alginate. Although the CPC method is good, advantageous, and routinely used, the agar in the media interferes with the action of CPC, which makes judgment about clearance zones very difficult. In addition, this method takes a minimum of 30 min to obtain the zone of hydrolysis after flooding and the hydrolyzed area is not sharply discernible. An improved plate assay is reported herein for the detection of extracellular alginate lyase production by microorganisms. In this method, alginate-containing agar plates are flooded with Gram's iodine instead of CPC. Gram's iodine forms a bluish black complex with alginate but not with hydrolyzed alginate, giving sharp, distinct zones around the alginate lyase producing microbial colonies within 2-3 min. Gram's iodine method was found to be more effective than the CPC method in terms of visualization and measurement of zone size. The alginate-lyase-activity area indicated using the Gram's iodine method was found to be larger than that indicated by the CPC method. Both methods (CPC and Gram's iodine) showed the largest alginate lyase activity area for Saccharophagus degradans (ATCC 43961) followed by Microbulbifer mangrovi (KCTC 23483), Bacillus cereus (KF801505) and Paracoccus sp. LL1 (KP288668) grown on minimal sea salt medium. The rate of growth and metabolite production in alginate-containing minimal sea salt liquid medium, followed trends similar to that of the zone activity areas for the four bacteria under study. These results suggested that the assay developed in this study of Gram's iodine could be useful to predict the potential of microorganisms to produce alginate lyase. The method also worked well for screening and identification of alginate lyase producers and non-producers from environmental samples on common laboratory media. They did this by clearly showing the presence or absence of clearance zones around the microbial colonies grown. This new method is rapid, efficient, and could easily be performed for screening a large number of microbial cultures. This is the first report on the use of Gram's iodine for the detection of alginate lyase production by microorganisms using plate assay.