L-Tagatose was produced directly from L-psicose by subjecting the same biomass suspension to microbial reduction followed by oxidation using a newly isolated bacteria Enterobacter aerogenes 230S. After various optimizations, it was observed that cells grown on xylitol have the best conversion potential. Moreover, E. aerogenes 230S converted L-psicose to L-tagatose at a faster rate in the presence of polyols such as glycerol, D-sorbitol, ribitol, L-arabitol, D-mannitol and xylitol. At 5% substrate concentration, the conversion ratio of L-psicose to L-tagatose was above 60% in the presence of glycerol. Identity of crystalline L-tagatose was confirmed by HPLC analysis, C-13-NMR spectra, and optical rotation.