INTRODUCTION; Enzymes have traditionally been used in an aque ous medium and the vast majority of studies on kinetics and stereoselectivity of bioorganic reactions have been performed on water-based systems. However, in recent years, much interest has been devoted to the use of enzymes in media of low water content. In comparison to an aqueous reaction medium, solvents of low polarity - are better solvents for many lipophilic substrates - can shift thermodynamic reaction equilibria towards condensation - may improve thermal stability of the enzymes, enabling reactions to be carried out at higher temperatures - may lead to simpler work-up since nonpolar solvents are more easily easily removed by evaporation under reduced pressure From a practical point of view the improved solubility of nonpolar reactants is very important. Low reactant solubility in water is a frequently encountered problem in enzyme catalyzed reactions, leading to low production capacity per vessel volume. Also the possibility to use hydrolytic enzymes, such as lipases, esterases, peptidases and amylases, to catalyze condensation reactions instead of bond cleavage is of considerable practical importance since it opens new ground for enzyme catalyzed processes. The characteristic features of enzymes in media of low water content are ideally suited for lipases whose natural substrates usually are of very low water solubility. Consequently, lipase function in nonpolar media and use of lipase to catalyze various types of reactions, e.g. ester synthesis, transesterification and ester hydrolysis, have been extensively investigated. Some enzymes have been found to function in essentially water-free systems. For instance, Klibanov has shown that both pancreatic and microbial lipases catalyze transesterification in nearly anhydrous organic solvents (1). However, it seems that the majority of enzymes loose their activity more rapidly in water-free systems than in media containing a small amount of water. The interest in microemulsions as reaction medium stems from the fact that in such systems the amount of water in the formulation can be varied almost at will and that the microheterogeneous nature of the systems provides a good environment for the enzyme. In the majority of cases L2 microemulsions, i. e. systems having water-in-oil (W/O) structure, have been used but the literature also contains examples of enzymatic reactions being conducted in microemulsions of higher water content having either a bicontinuous or an oil-in water (O/W) structure. In the literature there is often no clear distinction between microemulsions and micellar systems. For instance, a system containing a small amount of water solubilized in hydrocarbon may be referred to as a W/O microemulsion (or a L2 microemulsion) or as a system of reverse micelles (or swollen reverse micelles). It has been suggested that the borderline between reverse micelles and microemulsion droplets should be defined by the water to surfactant ratio; above molar ratio 15 the system should be referred to as a microemulsion (2). In this chapter no such distinction is made. All systems containing oil and water together with surfactant are termed microemulsions, regardless of the relative component proportions. Wells and his coworkers seem to have been the first to work systematically with proteins in microemulsions (3-5), although the concept of solubilizing a protein in a hydrocarbon solvent had been described earlier (6) Use of mi cro emul si ons as a medium for bio organic reactions was pioneered by the groups of Martinek (7), Luisi (8) and Menger (9) at the end of the 1970 s. Interest in the area grew rapidly and the field is today subject to considerable activity both in academia and in industry. Martinek has introduced the term "micellar enzymology" to cover the area of enzymatic catalysis in these systems (10). The phrase deliberately alludes to molecular biology. The use of enzymes in water-poor media is common in biological systems. Many enzymes, including lipases, esterases, dehydrogenases and oxido-reductive enzymes, often function in the cells in microenvironments which are hydrophobi c in nature . Also, the use of enzymes in microemulsions is not an artificial approach per se. In biological systems many enzymes operate at the interface between hydrophobic and hydrophilic domains and these interfaces are often stabilized by polar lipids and other natural amphiphiles (11). It is an established fact today that biological membranes need not be composed of flat bilayers of lipid molecules. Non-bilayer lipid structures seem to be essential for many processes occurring in the living cell, such as fusionl and compartmentalization of membranes (12). So called "lipid particles" « can be seen as reversed micelles sandwiched between monolayers of polar lipids. It is also known that many enzymes induce formation of such Wayer structure s upon incorporati on into b oth mo del and biolo gical membranes. Hence, studies of enzymes in W/O microemulsions are of relevance to biology in a wider sense than biocatalysis. However, this review chapter will not attempt to cover work specifically oriented to mimic the function of biological membranes ("membrane mimetics").