A purified lipase preparation from Candida rugosa was compared to its crude counterpart in anhydrous and slightly hydrated hydrophobic organic solvents. The pu rifled lipase preparation was less active than the crude enzyme in dry n-heptane, whereas the presence of small concentrations of added water dramatically activated the purified enzyme but not the crude enzyme, Thus, in the presence of as little as 0.25 mu L/mL of added water in n-heptane, the purified enzyme is over 230-fold more active and 6-fold more enantioselective than the dry enzyme suspension in the esterification of racemic 2-(4-chlorophenoxy)propionic acid with n-butanol. The reactivity and selectivity of this biocatalyst, however, was affected by coalescence of the enzyme preparation suspended in the wet organic solvent. Engineering the biocatalyst environment by dissolving the purified lipase in aqueous buffer and then adding this solution to n-heptane resulted in a precipitated enzyme preparation with smaller particle sizes that did not coalesce severely. In the presence of 5 mu L/mL of water added with the enzyme, this pretreatment resulted in an activation over the dry, purified enzyme preparation of over 1800-foId and nearly enantiospecific catalysis (E > 100), Hence, by simply modifying the way enzymes are hydrated, dramatic activation of catalytic competency can be achieved.