The biosynthesis of cephalexin was carried out inthe aqueous two-phase systems using penicillin acylase as acatalyst, and 7-aminodeacetoxicephalosporanic acid (7-ADCA)and phenylglycine methyl ester (PGME) as substrates. 20%PEG400-17.5% (NH4)2SO4 containing 0.5 M NaCl and 1.5 Mmethanol aqueous two-phase systems (ATPS) were selectedas reaction medium, and 53% product yield was obtainedusing immobilized penicillin acylase as a catalyst. 20%PEG400-15% MgSO4 ATPS was also used for the synthesisof cephalexin, and 60- 62% product yield was obtained byusing free penicillin acylase as a catalyst. When batchreactions were repeated in the ATPS, the cephalexin yieldsdecreased during the reactions due to deactivation, loss, andproduct inhibition of penicillin acylase. The effect of differentratio of phenylglycine methyl ester to 7-ADCA on theproduct yield was investigated, and high cephalexin yield wasobtained at a high molar ratio.