We studied kinetics and the equilibrium relationship for the thermolysin-catalyzed synthesis of N-(benzyloxycarbonyl)-L-aspartyl-L-phenylalanine methyl ester (Z-Asp-PheOMe) from N-(benzyloxycarbonyl)-L-aspartic acid (Z-Asp) and L-phenylalanine methyl ester (PheOMe) in an aqueous-organic biphasic system. This is a model reaction giving a condensation product with dissociating groups. The kinetics for the synthesis of Z-Asp-PheOMe in aqueous solution saturated with ethyl acetate was expressed by a rate equation for the rapid-equilibrium random bireactant mechanism, and the reverse hydrolysis reaction was zero-order with respect to Z-Asp-PheOMe concentration. The courses of synthesis of Z-Asp-PheOMe in the biphasic system were well explained, by the rate equations obtained for the aqueous solution and by the partition of substrate and condensation product between the both phases. The rate of synthesis in the biphasic system was much lower than in aqueous solution due to the unfavorable partition of PheOMe in the aqueous phase. The equation for the equilibrium yield of Z-Asp-PheOMe in the biphasic system was derived assuming that only the non-ionized forms of the substrate and condensation product exist in the organic phase. It was found theoretically and experimentally that the yield of Z-Asp-PheOMe is maximum at the aqueous-phase pH of around 5, lower than for synthesis in aqueous solution. The effect of the organic solvent on the rate and equilibrium for the synthesis of Z-Asp-PheOMe could be explained by the variation in the partition coefficient. The effect of the partitioning of substrate on the aqueous-phase pH change was also shown.