A biphasic organic/aqueous membrane bioreactor, which combined chemical reaction with continuous extraction of product in the aqueous phase, was investigated. Lipase from Candida cylindracea was used as catalyst with the hydrolysis of triglycerides, to fatty acids and glycerol, as a model-system for studying the optimal operating conditions. Asymmetric capillary membranes, made of polyamide, were used as support for the enzyme, which was immobilized into the sponge layer of the membrane by cross-how filtration. The catalytic behaviour of lipase, both immobilized in a hydrophylic membrane and free in solution, was compared. The effects of pH, temperature and substrate concentration on reactor performance were studied. The catalytic stability of the immobilized enzyme was improved compared with the enzyme in solution. The immobilized lipase showed no deactivation in an operating period of 16 days whereas lipase in solution gave an 80% decrease in specific activity after 2 days of continuous operation. The specific activity of immobilized lipase was significantly influenced by the amount of enzyme loaded into the membranes. The optimal range of immobilized protein was between 2 and 12 mg cm(-3). The positive results obtained with the model-system were also confirmed using the biphasic organic/aqueous membrane bioreactor in a potential practical application, namely the conversion and separation of one enantiomer from an organic racemic mixture of an ester.