A novel biocatalytic system for the synthesis of industrially relevant C2 chemicals (e.g., ethylene glycol (3)) from formaldehyde (1) was established. The biocatalytic system consisted of a newly discovered thermostable glyoxylate carboligase from Escherichia coli K-12 (EcGCL) and a lactaldehyde reductase (FucO) of E. coli K-12. EcGCL's affinity for formaldehyde was first improved by engineering the substrate access tunnel. One of the variants (i.e., EcGCLR484MN283QL478M) showed a high substrate affinity and catalytic efficiency of 18 mM and 5.2 M−1 s−1, respectively, for the condensation of two molecules of formaldehyde into one molecule of glycolaldehyde. The recombinant E. coli cells expressing both EcGCLR484MN283QL478M and FucO produced ethylene glycol (3) up to 6.6 mM from formaldehyde (1) with a bioconversion of 66% via glycolaldehyde (2), without leaving the reactants (1 and 2) in the reaction medium. This study demonstrated the biocatalytic synthesis of ethylene glycol from C1 compounds in an environment-friendly way.