AbstractThe in situ regeneration of reduced nicotinamide cofactors (NAD(P)H) is necessary for practical synthesis of many important chemicals. Here, we report the engineering of a highly stable and active mutant phosphite dehydrogenase (12x‐A176R PTDH) from Pseudomonas stutzeri and evaluation of its potential as an effective NADPH regeneration system in an enzyme membrane reactor. Two practically important enzymatic reactions including xylose reductase‐catalyzed xylitol synthesis and alcohol dehydrogenase‐catalyzed (R)‐phenylethanol synthesis were used as model systems, and the mutant PTDH was directly compared to the commercially available NADP+‐specific Pseudomonas sp. 101 formate dehydrogenase (mut Pse‐FDH) that is widely used for NADPH regeneration. In both model reactions, the two regeneration enzymes showed similar rates of enzyme activity loss; however, the mutant PTDH showed higher substrate conversion and higher total turnover numbers for NADP+ than mut Pse‐FDH. The space‐time yields of the product with the mutant PTDH were also up to fourfold higher than those with mut Pse‐FDH. In particular, a space‐time yield of 230 g L−1 d−1 xylitol was obtained with the mutant PTDH using a charged nanofiltration membrane, representing the highest productivity compared to other existing biological processes for xylitol synthesis based on yeast D‐xylose converting strains or similar in vitro enzyme membrane reactor systems. Biotechnol. Bioeng. 2007;96: 18–26. © 2006 Wiley Periodicals, Inc.