Enantio- and diastereoselective hydrogenation of β-keto-γ-lactams with a ruthenium-BINAP catalyst, involving dynamic kinetic resolution, has been employed to provide a general, asymmetric approach to β-hydroxy-γ-lactams, a structural motif common to several bioactive compounds. Full conversion to the desired β-hydroxy-γ-lactams was achieved with high diastereoselectivity (up to >98% de) by addition of catalytic HCl and LiCl, while β-branching of the ketone substituent demonstrated a pronounced effect on the modest to excellent enantioselectivity (up to 97% ee) obtained.