Previously we have demonstrated the reduction of ethyl and t-butyl diketoesters I to the corresponding syn-(3R,5S)-dihydroxy esters 2a by Acinetobacter sp. 13874. The syn-(3R,5S)-dihydroxy ester 2a was obtained with an enantiomeric excess (e.e.) of 99% and a diastereomeric excess (de) of 63%. In this report, we identified a gene encoding desired ketoreductase III which catalyzed the diastereoselective reduction of diketoesters I to syn-(3R,5S)-dihydroxy esters 2a and describe cloning and expression of ketoreductase III into Escherichia coli. Cells or extracts of recombinant E. coli efficiently reduced the diketoester 1 to the corresponding syn-(3R,5S)-dihydroxy ester 2a in 99.3% yield, 100% e.e., and 99.8% de. (C) 2008 Elsevier Inc. All rights reserved.