The enzymatic hydrolysis of a mixture of lutein diesters from Marigold flower (Tagetes erecta) was performed both in organic solvents and supercritical CO2 (SC-CO2) using two commercial lipases: lipase B from Candida antarctica (Novozym 435) and the lipase from Mucor miehei (Lipozyme RM IM). Both lipases showed an unexpected dependence of initial reaction rate with the initial water activity (awi) in hexane, with the highest rates of hydrolysis taking place at the lowest awi of the biocatalyst particles. The same result was observed using isooctane, toluene, or SC-CO2. It is proposed that an increase in awi generates a hydrophilic microenvironment that prevents efficient partitioning of the highly hydrophobic lutein diesters to the enzyme. The critical role of water in this system has not been reported for other hydrolytic reactions in low water media. Calculations of water available for hydrolysis from isotherm analysis, Karl-Fischer titration, and substrate conversion at awi = 0.13, indicate that the extent of reaction is not limited by the amount of available water. Accordingly, the enzyme that holds the largest amount of water after prehydration at the same awi (0.13) will yield the greatest substrate conversion and concentration of the free lutein product. The highest conversion occurred in SC-CO2, which opens up new opportunities to develop a combined extraction–reaction process for the environmentally benign synthesis of lutein, an important nutraceutical compound. Biotechnol. Bioeng. 2007;98: 535–542. © 2007 Wiley Periodicals, Inc.