A two-phase organic/aqueous reactor configuration was developed for use in the biodegradation of benzene, toluene and p-xylene, and tested with toluene. An immiscible organic phase was systematically selected on the basis of predicted and experimentally determined properties, such as high boiling points, low solubilities in the aqueous phase, good phase stability, biocompatibility, and good predicted partition coefficients for benzene, toluene and p-xylene. An industrial grade of oleyl alcohol was ultimately selected for use in the two-phase partitioning bioreactor. In order to examine the behavior of the system, a single-component fermentation of toluene was conducted with Pseudomonas sp. ATCC 55595. A 0.5-l sample of Adol 85 NF was loaded with 10.4 g toluene, which partitioned into the cell containing 1 l aqueous medium at a concentration of approximately 50 mg/l. In consuming the toluene to completion the organisms were able to achieve a volumetric degradation rate of 0.115 g l(-1) h(-1). This system is self-regulating with respect to toluene delivery to the aqueous phase, and requires only feedback control of temperature and pH.