Whole Bacillus subtilis cells can catalyze stereoselective hydrolysis of menthyl acetate in a small-scale two-phase membrane bioreactor. A layer of cells was deposited on one side of a 0.2 mu m microporous nylon membrane and then neat liquid racemic menthyl acetate was circulated past the same side. This organic phase was pressurized slightly relative to the aqueous buffer which flowed past the other face of the membrane. No breakthrough or cell detachment was observed over 24 h operation. The total reaction rate reached a maximum with a cell layer of about 40 mu m, then declined far thicker layers. The specific activity (per unit biomass) at the maximum was about five times higher than with the same cells in an emulsion reactor. This probably reflects continuous good contact with both phases.