A nitrogen-fixing bacterium Azotobacter vinelandii was isolated from the mangrove rhizospheric soil of Irrawaddy Region, Myanmar. Screening and quantitative determination of the nitrogen fixation activity and alginate producing activity of the isolated strain was studied. The algD and algU gene fragments of Azotobacter vinelandii were isolated by using designated primers. A deletion was engineered in the cloned algD and algU genes by digestion with suitable restriction endonucleases and kanamycin resistance gene cartridge was inserted. The mutation was subsequently transferred to the host bacteria, Azotobacter vinelandii by biparental mating using pEX18 vector and E .coli ST 18 under pressure of kanamycin selection. Two mutant strains were developed and confirmed by PCR. The resultant two mutant strains lost their nitrogen fixation activity due to loss of their alginate producing activity were observed.