1S,2R-Indene oxide is the precursor of cis-1S,2R-aminoindanol, a key intermediate for the Merck HN-I protease inhibitor, Crixivan(R). As an alternative to the challenging chemical synthesis of this chiral epoxide from indene, the biotransformation route using an enzyme catalyst was examined. Approximately 3% of the 400 fungal cultures isolated from high salt environments were found to possess neutral haloperoxidase activities. Subsequent studies revealed that indene conversion by these positive cultures could only be obtained when both hydrogen peroxide and bromide ions were present. The products were generally racemic trans-bromoindanols which upon basification yielded racemic epoxides. Finally it was found that a crude enzyme preparation from the fungal culture Curvularia protuberata MF5400 converted indene To the chiral 2S,1S-bromoindanol which can be chemically converted to the desired 1S,2R-epoxide through basification or used directly in the asymmetric synthesis of cis-1S,2R-aminoindanol. The bioconversion rate and the enantiomeric excess (ee) achieved with this cell-free system were heavily pH dependent. Art initial 1.5-h reaction at pH 7.0 gave similar to 10% yield of the chiral bromoindanol or epoxide from indene, and the yield was rapidly improved to >30% for trans-2S,1S-bromoindanol with an ee of 80%. Reaction mechanistic studies revealed that the stereoselectivity observed was apparently due to a specific dehydrogenase activity present in MF5400 which was also found to resolve chemically synthesized racemic trans-2-bromoiadanols.