When racemic 1-arylethanol is reacted with Geotrichum candidum IFO 5767 in water, (R)-1-arylethanol is obtained in high yield with excellent ee. It has been found that (S)-1-arylethanol is converted into the antipode via oxidation to the corresponding aryl methyl ketone and successive reduction of the ketone to the (R)-alcohol. Allyl alcohol as an additive enhances deracemization.