Levan is a homopolymer of fructose naturally obtained from both the plants and microorganisms. Along with the general properties of a biopolymer like bio-compatibility, bio-degradability, renewability, flexibility, and eco-friendliness, levan also offers some important biomedical properties such as anti-oxidant, anti-inflammatory, anti-carcinogenic, anti-AIDS and hyperglycaemic inhibitor. In this study, we have demonstrated the microbial production of therapeutically potential levan by batch fermentation process in sucrose rich medium using Acetobacter xylinum NCIM 2526. The produced Levan was characterized using various physicochemical techniques such as FTIR, 1H NMR, 13C NMR spectroscopy, TGA and HPLC. The biomedical potential of the isolated A. xylinum levan for its anti-oxidant and anti-inflammatory activities was exploited in vitro. Further the present study also focused on the optimization of levan production using one factor at a time approach followed by a statistical method, central composite design (CCD) with selected variables. The yield of levan was increased significantly from 0.54 to 13.25g/L with the optimized variables.