A thermostable D-hydantoinase from Bacillus stearothermophilus SD-1 was previously mass-produced by batch cultivation of the recombinant E. coil harboring the gene encoding the enzyme (Lee et al., 1997). In this work, we attempted to optimize the process for the production of N-carbamoyl-D-p-hydroxyphenylglycine, which is readily hydrolyzed to D-p-hydroxyphenylglycine under acidic conditions, from 5-(4-hydroxyphenyl)hydantoin using the mass-produced D-hydantoinase. In an effort to overcome the low solubility of the substrate, enzyme reaction was carried out in a heterogeneous system consisting of a high substrate concentration up to 300 g/L. In this reaction system, most of substrate is present in suspended particles. Optimal temperature and pH were determined to be 45 degrees C and 8.5, respectively, by taking into account the reaction rate and conversion yield. When the free enzyme was employed as a biocatalyst, enzyme loading higher than 300 unit/g-substrate was required to achieve maximum conversion. Use of whole cell enzyme resulted in maximum conversion even at lower enzyme loadings than the free enzyme, showing 96% conversion yield at 300 g/L substrate. The heterogeneous reaction system used in this work might be applied to the enzymatic production of other valuable compounds from a rarely water-soluble substrate. (C) 1998 John Wiley & Sons.