A fed-batch culture strategy for the production of recombinant Escherichia coli cells anchoring surface-displayed transglucosidase for use as a whole-cell biocatalyst for α-arbutin synthesis was developed. Lactose was used as an inducer of the recombinant protein. In fed-batch cultures, dissolved oxygen was used as the feed indicator for glucose, thus accumulation of glucose and acetate that affected the cell growth and recombinant protein production was avoided. Fed-batch fermentation with lactose induction yielded a biomass of 18 g/L, and the cells possessed very high transglucosylation activity. In the synthesis of α-arbutin by hydroquinone glucosylation, the whole-cell biocatalysts showed a specific activity of 501 nkat/g cell and produced 21 g/L of arbutin, which corresponded to 76% molar conversion. A sixfold increased productivity of whole cell biocatalysts was obtained in the fed-batch culture with lactose induction, as compared to batch culture induced by IPTG.