Catalyzed by Rhodococcus erythropolis AJ270, a nitrile hydratase and amidase containing microbial whole cell catalyst, a number of racemic 1-arylmethyl- and 1-allyl-4-oxoazetidine-2-carbonitriles and carboxamides underwent efficient transformations under very mild conditions to produce enantiopure functionalized S-amide and R-acid products in excellent yields. While the nitrile hydratase showed good enzyme activity but virtually no enantioselectivity, the amidase displayed high R-enantioselectivity against almost all amide substrates tested. The synthetic applications of the resulting functionalized chiral β-lactam derivatives were demonstrated by the facile preparation of β-lactam-fused heterocyclic compounds.