The synthesis of N-benzyloxycarbonyl-L-aspartyl-L-phenylalanine methyl ester(ZAPM), a precursor of aspartame, from N-benzyloxycarbonyl-L-aspartic acid(Z-Asp) and L-phenylalanine methyl ester hydrochloride(L-PM-HCl) was investigated in ethylacetate-MES buffer two-phase system using thermolysin. In organic two-phase system, the degree of spontaneous hydrolysis of L-PM. HCl was significantly reduced with increasing the volume ratio of organic to aqueous phase. Stability of thermolysin in organic two-phase system was found to be higher than that in MES buffer solution. More than 90% of initial enzyme activity was maintained after 10 days of incubation in case that the volume of organic phase was equal to that of buffer phase, while the half life of thermolysin was about 2 days in aqueous buffer solution. The results of partitioning of substrates and product in organic two-phase system showed that the difference in partition coefficients between substrates and product was maximum at pH 5.5. The optimal pH for 2-APM synthesis in organic two-phase system was found to be 5.5-5.8, which is consistent with the value expected from the partition experiments. As the concentration of substrates was increased the conversion yield of Z-APM was increased with concomitant reduction of L-PMqHC1 hydrolysis. In case that the concentration of L-PM-HCl and Z-Asp were 160 mM and 80 mM respectively, the conversion yield of Z-APM reached 90% after 28 hrs of reaction. The yield obtained at different volume ratio of organic phase compares well with the predicted equilibrium constant in biphasic system.