With the aim of applying redox-neutral cascade reactions in organic media, fusions of a type II flavin-containing monooxy-genase (FMO-E) and horse liver alcohol dehydrogenase (HLADH) were designed. The enzyme orientation and expression vector were found to influence the overall fusion enzyme activity. The resulting bi-functional enzyme retained the catalytic properties of both individual enzymes. The lyophilized cell free extract containing the bifunctional enzyme was applied for the convergent cascade reaction consisting of cyclobutanone and 1,4-butanediol in different micro-aqueous media with only 5% (v/v) aqueous buffer without any addition of external cofactor. Methyl tert-butyl ether and cyclopentyl methyl ether were found to be the best organic media for the synthesis of γ-butyrolactone resulting in ~27% analytical yield.