(R)-4-Chloro-3-hydroxybutyrate (CHB) and (S)-3-hydroxy-gamma-butyrolactone (HL) are used for the synthesis of biologically and pharmacologically important compounds. Enterobacter sp. DS-S-75 was found to have the unique activity to convert (S)-CHB in the racemate to (S)-HL through asymmetric dechlorination, hydrolysis, and lactonization. As a result, the remaining (R)-CHB and formed (S)-HL could be obtained in a one-pot reaction. We purified the CHB degrading enzyme which catalyzing these reactions and isolated the coding gene from the strain DS-S-75 in order to improve the productivity of these compounds using the transformant. Interestingly, the purified enzyme showed not only dechlorinating, but also hydrolyzing activities on CHB and the similar carboxylic esters, it was then designated CHB hydrolase, and appears to be a novel enzyme. The gene had 1101 bp encoding 367 amino acids including a signal peptide composed of 25 residues. The deduced amino acid sequence contained a conserved region generally found in esterases and lipases, but did not have significant similarity. When asymmetric degradation of racemic methyl CHB (CHBM) was performed using a culture broth of Escherichia coli DH5 alpha transformed with the isolated gene, the reaction time was shortened 20-fold over that of the strain DS-S-75, and the maximum concentration of the substrate could be increased from 8%) to 15% (w/v). Moreover, both of the obtained residual (R)-CHBM and the formed (S)-HL had high optical purities (> 99% e.e.).