(R)-Phenylacetyicarbinol (PAC), a pharmaceutical precursor, was produced from benzaldehyde and pyruvate by pyruvate decarboxylase (PDC) of Candida utilis in an aqueous/organic two-phase emulsion reactor. When the partially purified enzyme in this previously established in vitro process was replaced with C. utilis cells and the temperature was increased from 4 to 21 degrees C, a screen of several 1-alcohols (C4-C9) confirmed the suitability of 1-octanol as the organic phase. Benzyl alcohol, the major by-product in the commercial in vivo conversion of benzaldehyde and sugar to PAC by Saccharomyces cerevisiae, was not formed. With a phase volume ratio of 1:1 and 5.6 g C. utilis l(-1) (PDC activity 2.5 U ml(-1)), PAC levels of 103 g l(-1) in the octanol phase and 12.8 g l(-1) in the aqueous phase were produced in 15 h at 21 degrees C. In comparison to our previously published process with partially purified PDC in an aqueous/octanol emulsion at 4 degrees C, PAC was produced at a 4-times increased specific rate (1.54 versus 0.39 mg U-1 h(-1)) with simplified catalyst production and reduced cooling cost. Compared to traditional in vivo whole cell PAC production, the yield on benzaldehyde was 26% higher, the product concentration increased 3.9-fold (or 6.9-fold based on the organic phase), the productivity improved 3.1-fold (3.9 g(-1) h(-1)) and the catalyst was 6.9-fold more efficient (PAC/dry cell mass 10.3 g g(-1)).