Microbial transformation of benzaldehyde into L-phenylacetylcarbinol by whole cell Saccharomyces cerevisiae has been carried out in a novel polyethylene glycol (PEG)-induced cloud point system. The system is composed of 80 g PEG 20,000, 75 ml Triton X-100, 20 g peptone, 10 g yeast extract, 25 g glucose, 1 g MgSO4 center dot 7H(2)O, 0.05 g CaCl2 center dot 2H(2)O, 35 g Na2HPO4 center dot 12H(2)O, and 10.7 g citric acid per liter of tap water. The microbial transformation is conducted at 0.6 ml of acetaldehyde (35% volume content), 0.9 ml of benzaldehyde, and 7 g of wet cell per 100 ml of the PEG-induced cloud point system. Under the conditions, a relatively longer-term bioactivity of whole cell microorganism in the PEG-induced cloud point system has been achieved. A fed-batch microbial transformation process with a discrete addition of glucose and substrate gets a high final product concentration of about 8 g/l.