Microbial production of (2S,3S)-2,3-dihydro-3-hydroxy-2-(4-metho [(2S,3S)-2], a key intermediate in the synthesis of diltiazem hydrochloride, was examined. The reduction of (RS)-2-(4-methoxyphenyl)-1,5-benzothiazepin-3,4(2H,5H)-dione [(RS)-1] by various microorganisms produced a mixture of stereoisomers with the (2S,3S) stereoisomer being the major product. Among the microorganisms tested, baker’s yeast afforded the highest conversion yield and excellent stereoselectivity for the production of (2S,3S)-2. When asymmetric reduction using baker’s yeast was carried out at the substrate concentration of 3.34 mM with the addition of N,N-dimethylformamide solution containing 0.0334-0.334 M (RS)-1 to the reaction mixture, the reaction gave (2S,3S)-2 with a conversion yield of 92-94% and an optical purity of > 99.9% enantiomeric excess. Crystals of (23,3S)-2 were isolated with a total yield of 85%. 3-Hydroxy-2-(4-methoxyphenyl)-1,5-benzothiazepin-4(5H)-one S-oxide [oxide-1] and (2S,3S)-2 were formed as by-products in the reaction mixture. The optimum conditions for (2S,3S)-2 production containing a minimum amount of by-products were pH 7.0 and 42 degrees C. The decrease of the conversion yield of (2S,3S)-2 was attributable to the conversion to oxide-1 with increasing substrate concentration. It was concluded that the production method of diltiazem hydrochloride using microbial asymmetric reduction was an excellent method from the viewpoint of yield.