Optically pure (S)-1-phenyl-1,2-ethanodiol(PED) is a versatile chiral building block for the synthesis of pharmaceuticals, pheromones and liquid crystals. An alternative and convenient biocatalytic process was developed for the preparation of (S)-PED by Gluconobacter oxydans-catalyzed optical resolution of the corresponding racemate. Whole cells of G. oxydans DSM2003 were found to catalyze the regio- and stereo-selective concurrent oxidation of racemic PED to give (S)-PED with the optical purity of 99% and yield of 38% in 10h, meanwhile (R)-mandelic acid with moderate ee value produced. This oxidation is carried out by two sets of enzymes, the one made of membrane-bound alcohol dehydrogenase is responsible for the PED oxidation to hydroxyl aldehyde intermediate and the other composed of membrane-bound aldehyde dehydrogenase and other enzymes is responsible for the mandelic acid production.