Hydroxylated amino acids and their derivatives, including those found in proteins, are important in biology and medicinal chemistry. Incubation of N-acetyl-l-arginine with clavaminic acid synthase, a key oxygenase in clavulanic acid biosynthesis, affords a (3R)-hydroxylated product that is identical to material obtained by total synthesis from Boc-beta alanine. The key step employed dynamic kinetic resolution (DKR) of a β-ketoester precursor, achieved in high diastereomeric and enantiomeric excess using an (R)-SEGPHOS/Ru(II) catalyst. The results highlight the utility of DKR for the preparation of C-3 hydroxylated amino acid derivatives.