R-2-hydroxy-4-phenylbutyric acid (R-HPBA) is an important intermediate in the manufacture of angiotensin converting enzyme inhibitors. In this work, a recombinant D-lactate dehydrogenase (LDH) was used to transform 2-oxo-4-phenylbutyric acid (OPBA) to R-HPBA, with concomitant oxidation of beta-nicotinamide adenine dinucleotide (NADH) to NAD(+). The cofactor NADH was regenerated by formate dehydrogenase (FDH) present in whole cells of Candida boidinii, which were pre-treated with toluene to make them permeable. The whole cells used in the process were more stable and easier to prepare as compared with the isolated FDH from the cells. Kinetic study showed that the reaction rate was dependent on the concentration of cofactor, NAD(+), and that both R-HPBA and OPBA inhibited the reaction. A novel method for co-immobilization of whole cells and LDH enzyme on cotton cloth was developed using polyethyleneimine (PEI), which induced the formation of PEI-enzyme-cell aggregates and their adsorption onto cotton cloth, leading to multilayer co-immobilization of cells and enzyme with high loading (0.5 g cell and 8 mg LDH per gram of cotton cloth) and activity yield ( > 95%). A fibrous bed bioreactor with co-immobilized cells and enzyme on the cotton cloth was then evaluated for R-HPBA production in fed-batch and repeated batch modes, which gave relatively stable reactor productivity of 9 g/L . h and product yield of 0.95 mol/mol OPBA when the concentrations of OPBA and R-HPBA were less than 10 g/L.