Optically pure (S)- 3-hydroxy-gamma-butyrolactone, an important chiral building block in the pharmaceutical industry, was synthesized from L-malic acid by combining a selective hydrogenation and a lipase-catalyzed hydrolysis. Lipase from Candida rugosa was found to be the most efficient enzyme for the hydrolysis of (S)-beta-benzoyloxy-gamma-butyrolactone. The use of organic solvent-aqueous two-phase system was employed to extract benzoic acid generated from enzymatic hydrolysis of the substrate. Tert-butyl methyl ether as an organic solvent was effective to extract the reaction product, benzoic acid, and stably maintained the enzyme activity of Lipase OF immobilized on polymeric supports Amberlite (R) XAD-7. The immobilization made the recovery of the product simpler and prevented the formation of the emulsion. The pH adjustment was unnecessary with the immobilized Lipase OF. The scale-up of the enzymatic hydrolysis of S-BBL at 1,850-kg scale was carried out without problems to give 728.5kg of S-HGB at 80% isolated yield. The scale-up results are similar to those of bench scale reactions. Racemic (R, S)-beta-benzoyloxy-gamma-butyrolactone was prepared from D-, L-malic acid and was found to be hydrolyzed nonselectively by the enzyme.