The yiaE gene from Escherichia coli K12 was functionally expressed in E. coli BL21 using an IPTG inducible pET expression system (2.1 U/mg), and YiaE was purified to a specific activity of 18 U/mg. The purified enzyme catalyzes reduction of various aromatic and aliphatic 2-oxo carboxylic acids to the corresponding (R)-2-hydoxy carboxylic acids using NADPH. For practical applications, the problem of NADPH recycle was effectively solved by using recombinant E. coli overexpressing YiaE and glucose dehydrogenase from Bacillus subtilis in the same cell. The recombinant E. coli was used to prepare (R)-phenyllactic acid and (R)-2-hydroxy-4-phenylbutanoic acid from the corresponding 2-oxo carboxylic acids (98% ee) while the alpha-carbonyl group of 2,4-dioxo-4-phenylbutyric acid was reduced regio- and stereospecifically to give (R)-2-hydroxy-4-oxo-4-phenylbutyric acid (97% ee) in quantitative yields. The cells could be recycled for 3 days at room temperature in 100 mM phosphate buffer (pH 7.0) without loss of activity, which reduced to 70% after 1 week.