The yeast Hansenula capsulata IFO 0974 was found to catalyze oxidation of the (S)-isomer of 1-phenylethanol (1-PA) with very high stereoselectivity to leave the (R)-isomer. In batch reactions, H. capsulata showed better tolerance against high concentrations of the substrate and product, acetophenone, than the yeast Pachysolen tannophilus IFO 1007, which also catalyzed the stereoselective oxidation. The effects of the temperature and pH of the medium on the initial oxidation rate were also investigated with the two yeast strains. Using immobilized H. capsulata cells in a fluidized-bed reactor, continuous production of the (R)-isomer through enantioselective oxidation of racemic 1-PA was attained by incorporating intermittent re-cultivation of deactivated cells during the resolution.