The enzyme 4-oxalocrotonate tautomerase (4-OT) encoded by the xylH gene is a part of the degradation pathway of aromatic compounds in Pseudomonas putida mt-2. 4-OT was described to catalyze Michael-type addition of acetaldehyde to β-nitrostyrene, and the whole cell system based on recombinantly expressed 4-OT has been developed previously. In this study biocatalytic process based on Escherichia coli whole cells expressing 4-OT was significantly improved using immobilization and ex situ product recovery strategies. Whole cell immobilization in alginate beads was applied in biocatalytic production of 4-nitro-3-phenyl-butanal from β-nitrostyrene and acetaldehyde. Immobilized biocatalyst showed wider pH activity range and could tolerate twofold higher initial concentrations of substrate in comparison to the free whole cell biocatalyst. Beads retained their initial activity over 10 consecutive biotransformations of the model reaction and remained suitable for the repetitive use with 85% of the initial activity after two months of storage. Bioprocess was further improved by utilizing Amberlite XAD-2 hydrophobic resin for the product recovery. With this modification, the amount of organic solvent was reduced 40-fold in comparison to previously reported method making this biocatalytic process greener.