Permeabilized brewer's yeast cells were immobilized in modified composite polyvinyl alcohol lens-shaped capsules containing montmorillonite (MONT) and dimethyldioctadecylammonium bromide (DDAB). The special properties of the capsules were then investigated. The results showed that the diffusion capability of hydrophobic molecules from bulk solution into the capsules was obviously improved by the introduction of 0.5% MONT and 0.05% DDAB into the 15% PVA matrix. More importantly, when ethyl 4-chloro-3-oxobutanoate (COBE) was reduced with the capsules as the biocatalyst, the yield and enantiomeric excess (ee) of the product reached 88% and 99.1%, respectively, within 8 h, which are significantly higher totals than those mediated by the unmodified PVA capsules under the same conditions. The intracellular alcohol dehydrogenase (ADH) in the capsules retained over 81% of its original activity after 1 month of storage and 88% of its initial activity after 20 cycles of reaction. (C) 2010 Elsevier Ltd. All rights reserved.