(S)(E)-2-{3-[3-[2-(7-chloro-2-quinolinyl)ethenyl]-phenyl]-3-hydroxypropyl} benzoic acid methyl ester, a key intermediate in the synthesis of the antiasthma drug, Montelukast, was prepared from the corresponding ketone (keto ester M) by microbial transformation. The biotransforming organism, Micro-bacterium campoquemadoensis (MB5614), was discovered as a result of an extensive screening program and was used for the isolation and purification of the responsible enzyme. The enzyme is a soluble cytoplasmic protein which was purified as a complex with a low-molecular-mass molecule that had a visible-light absorption maximum at 460 nm. The purified enzyme has an apparent molecular mass of 60 kDa, when denatured, and is isolated in the native state as an oligomer. The isolated enzyme requires NADPH for its activity and reduces the keto ester M to the desired (S)-hydroxy ester with an enantiomeric excess greater than 95% at the optimum temperature of 30 degrees C and pH 8. The enzyme was immobilized on oxirane-activated acrylamide beads with some loss of activity, but it was fully active in a two-phase (water/hexane 25:75) solvent system, both as a free solution and in an immobilized form.