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We report on cell surface engineering of living microorganisms by using Layer-by-Layer (LbL) technology to extend the substrate spectrum. The yeast Arxula adeninivorans LS3 (Arxula) was employed as a model organism and biological template. By using LbL technology, Arxula cells were encapsulated by polyelectrolyte and enzyme layers. The biological activity of the Arxula was retained after the encapsulation process. The polymeric capsule surrounding the Arxula provides a stable interface for surface engineering of living cells. LbL of polyelectrolytes followed by an enzyme layer of lactate oxidase were assembled. The outer enzyme layer provides an additional biological function for Arxula to convert the unfavourable substrate lactate into the favourable substrate pyruvate, thus extending the substrate spectrum of the organism. Moreover, capsule stability and enzyme conjugate stability of the surface engineered Arxula were studied.