Lycopene is produced by recombinant Escherichia coli expressing genes to encode for the lycopene biosynthesis. However, the productivity of lycopene seemed to be limited by many factors including product toxicity. In the present study, we have investigated physiology of recombinant E. coli during biosynthesis and in situ recovery of lycopene based on an organic/aqueous two-phase system. Lycopene, the 40-carbon molecule product, was little extracted from recombinant E. coli cells to octane or decane phase. However, partial digestion of cell walls with lysozyme promoted extraction of lycopene into the organic phases. Engineering of an organic/aqueous two-phase system allowed recombinant E. coli cells to produce ca. 40% larger amount of lycopene compared to that in a conventional aqueous single-phase system. Optimization of the in situ product recovery process will lead to further increase of product concentration and productivity.