Whole cell biocatalysts are being examined closely by industry for asymmetric synthesis because of their inherent enantioselectivity. In this study, Mycobacterium M156 was used to convert allyl phenyl ether (APE) to the chiral intermediate phenyl glycidyl ether (PGE). Unfortunately, the large-scale production of PGE is difficult due to its hydrophobic nature and the product inhibition of the monoxygenase enzyme carrying out the reaction; hence, in order to address these problems, this work explored the possibility of producing PGE in an aqueous-organic two-phase system and examined the influence of system parameters on the rate and duration of epoxidation. Hexadecane was chosen as the most suitable solvent since it did not result in molecular toxicity and provided a good reservoir for both the PGE and APE. Increased mixing enhanced the rate of epoxidation, presumably by increasing the interfacial area for mass transfer and enhancing mixing in the bulk phases. Increased substrate concentration in the organic phase resulted in "pseudo" Michealis-Menten type behavior with the maximum extrinsic rate measured at 6.7 nmol mg(-1) dwt min(-1), with a half-rate constant (K-m) of 0.144 mM. PGE production ceased after around 2 h; reasons such as phase toxicity, lack of inactivated over time by intracellular PGE, although APE and hexadecane may have played a small role.