The unique function of 4-hydroxyisoleucine (4-HIL) is to stimulate glucose-induced insulin secretion in a glucose-dependent manner. 4-HIL is distributed only in certain kinds of plants and mushrooms, but the biosynthetic mechanism of 4-HIL has not been elucidated. Moreover, 4-HIL-producing microorganisms have not been reported. l-isoleucine (l-Ile) hydroxylating activity producing 4-HIL was detected in a cell lysate of Bacillus thuringiensis strain 2e2 AKU 0251 obtained from the mid-late exponential phase of growth. Properties of the purified hydroxylase demonstrated that it is a alpha-ketoglutaric acid (alpha-KG) dependent l-Ile dioxygenase (IDO) and requires alpha-KG, ferric ion, and ascorbic acid for its maximum activity. IDO showed high stereoselectivity in l-Ile hydroxylation producing only (2S,3R,4S)-4-HIL. The N-terminal 22 amino acids sequence revealed high homology to a hypothetical protein (GenBank ID: RBTH_06809) in B. thuringiensis serovar israelensis ATCC 35646. The histidine motif, which is conserved in alpha-KG dependent dioxygenases, is found in RBTH_06809.