In a toluene-water mixture, toluene disproportionation can occur under very gentle conditions if enhanced by a hydraulic cavitation field. Using a single factor approach, the effects of toluene concentration, ethanol and H2O2 addition, final reaction temperature, and pH on toluene conversion and yields of products in the organic phase were investigated. The optimal reaction conditions for p-xylene (PX), an objective product, were 12.5% (v/v) concentration of toluene and ethanol, final reaction temperature of 50 degrees C, pH of 9, and a H2O2 addition of 2.5% (v/v). Under such conditions, the toluene conversion reached 19.66%, and yields of benzene, alkyl cycloalkanes, and alkyl aromatic hydrocarbons were 2.70%, 2.64%, and 14.32%, respectively. Particularly, yields of PX, oxylene (OX), and ethylbenzene were 8.56%, 4.06%, and 1.70%, respectively. A reaction mechanism was proposed and validated via both UV spectroscopy of the aqueous-phase products and material balance for the process.