A stereoselective synthesis of the hydroxyethylene dipeptide isostere 1 is described. The route employs a substrate-directed kinetic protonation of an alpha/gamma-substituted lactone to afford the desired stereochemistry. A method for converting the diastereomerically enriched intermediate lactone to the ring-open form with retention of stereochemistry is demonstrated. A novel procedure for utilizing N,N-dibromo-5,5-dimethylhydantoin in Hofmann rearrangements is disclosed. This route was used to prepare amino alcohol 1, the core portion of the HIV protease inhibitor A-792611, in 46% yield from phenylalanine-derived epoxide 2.