An efficient and practical procedure for simultaneous generation of highly pure methyl (R)-4-chloro-3-hydroxybutyrate and (S)-3-hydroxy-gamma-butyrolactone using bacterial cells of Enterobacter sp. DS-S-75 was developed. The resulting methyl (R)-4-chloro-3-hydroxybutyrate from the racemate (8% w/v) exhibited high optical purity (>99% enantiomeric excess) with a yield of 48%. Another of the dual products, (S)-3-hydroxy-gamma-butyrolactone, was also obtained with excellent optical purity (95.9% enantiomeric excess) in a high mole conversion yield of 48%. This conversion of methyl (S)-4-chloro-3-hydroxybutyrate into (S)-3-hydroxy-gamma-butyrolactone by the resting cells of the strain DS-S-75 proceeded with the complete stereoselectivity releasing chloride ion and methanol; namely, no dechlorinating activity for methyl (R)-4-chloro-3-hydroxybutyrate was detected. The cellfree extracts from the strain DS-S-75 showed dechlorinating activity for several alkyl (S)-4-chloro-3-hydroxybutyrates to give (S)-3-hydroxy-gamma-butyrolactone, but not for chlorohydrins, chloroacetone, and chloroacids.