Microcompartmentalization offers a high-throughput method for screening large numbers of biocatalysts generated from genetic libraries. Here we present a microcompartmentalization protocol for benchmarking the performance of whole-cell biocatalysts. Gel capsules served as nanolitre reactors (nLRs) for the cultivation and analysis of a library of Bacillus subtilis biocatalysts. The B. subtilis cells, which were co-confined with E. coli sensor cells inside the nLRs, converted the starting material cellobiose into the industrial product vitamin B2. Product formation triggered a sequence of reactions in the sensor cells: (1) conversion of B2 into flavin mononucleotide (FMN), (2) binding of FMN by a RNA riboswitch and (3) self-cleavage of RNA, which resulted in (4) the synthesis of a green fluorescent protein (GFP). The intensity of GFP fluorescence was then used to isolate B. subtilis variants that convert cellobiose into vitamin B2 with elevated efficiency. The underlying design principles of the assay are general and enable the development of similar protocols, which ultimately will speed up the optimization of whole-cell biocatalysts.