D-p-hydroxyphenylglycine (D-HPG) functions as an intermediate and has important value in antibiotic industries. The high pollution and costs from chemical processes make biotechnological route for D-HPG highly desirable. Here, a whole-cell transformation process by D-hydantoinase(Hase) and D-carbamoylase(Case) was developed to produce D-HPG from DL-hydroxyphenylhydantoin(DL-HPH) in Escherichia coli. The artificially designed ribosome binding site with strong intensity significantly facilitated the protein expression of limiting step enzyme Case. Next, the cell wall permeability was improved by disturbing the peptidoglycan structure by overproduction of D,D-carboxypeptidases without obviously affecting cell growth, to increase the bioavailability of low soluble hydantoin substrate. By fine-tuning regulation of expression level of D,D-carboxypeptidase DacB, the final production yield of D-HPG increased to 100% with 140 mM DL-HPH substrate under the optimized transformation conditions. This is the first example to enhance bio-productivity of chemicals by cell wall engineering and creates a new vision on biotransformation of sparingly soluble substrates. Additionally, the newly demonstrated 'hydroxyl occupancy' phenomenon when Case reacts with hydroxyl substrates provides a referential information for the enzyme engineering in future.