A key intermediate, (3R-cis)-1,3,4,5-tetrahydro-3-hydroxy-4-(4-methoxyphenyl)-6-(trifluorome thyl)- 2H-1-benzazepin-2-one (compound II or SQ32191), with high optical purity was made by the stereoselective microbial reduction of the parent ketone 1. Several strains of bacterial and yeast cultures were screened for the ability to catalyse the stereoselective reduction of 4,5-dihydro-4-(4-methoxyphenyl)-6-(trifluoromethyl)-1H-1-benzazepin++ +-2,3-dione [compound I or SQ32425]. Microorganisms from the genera Nocardia, Rhodococcus, Alkaligenes, Corynebacterium, Arthrobacter, Hansenula, and Candida reduced compound I to compound II with 60-70% conversion yield. In contrast, microorganisms from the genera Pseudomonas and Acinetobacter reduced compound I stereospecifically to (trans)-1,3,4,5-tetrahydro-3-hydroxy-4-(4-methoxyphenyl)-6-(trifluoromet hyl-2H- 1-benzazepin-2-one (compound III or SQ32408). Among various cultures evaluated, N. salmonicolor SC6310 effectively catalysed the transformation of compound I to compound II with 96% conversion yield at 1.5-2.0 gl-1 concentration. Compound II was isolated and identified by NMR analysis, mass spectrometry, and comparison to an authentic sample. Preparative scale fermentation process and transformation process were developed using cell suspensions of N. salmonicolor SC6310 to catalyse the transformation of compound I to compound II. The isolated compound II had a melting point of 222 degrees C (reference 221-223 degrees C), optical rotation of +130.4 (reference +128 degrees C), and optical purity of greater than 99.9% as analyzed by NMR and chiral HPLC.