The objective of this research was to evaluate several factors affecting the performance of a two-stage treatment system employing methane-oxidizing bacteria for trichloroethylene (TCE) biodegradation. The system consists of a completely mixed growth reactor and a plug-flow transformation reactor in which the TCE is cometabolized. Laboratory studies were conducted with continuous growth reactors and batch experiments simulating transformation reactor conditions. Performance was characterized in terms of TCE transformation capacity (T-C, g TCE/g cells), transformation yield (T-Y, g TCE/g CH4), and the rate coefficient ratio k(TCE)/K-S,K-TCE (L/mg-d). The growth reactor variables studied were solids retention time (SRT) and nutrient nitrogen (N) concentration. Formate and methane were evaluated as potential transformation reactor amendments. Comparison of cultures from 2- and 8-day SRT (nitrogen-limited) growth reactors indicated that there was no significant effect of growth reactor SRT or nitrogen availability on T-C or T-Y, but N-limited conditions yielded higher k(TCE)/K-S,K-TCE. The TCE cometabolic activity of the 8-day SRT, N-limited growth reactor culture varied significantly during a 7-year period of operation. The T-C and T-Y the resting cells increased gradually to levels a factor of 2 higher than the initial values. The reasons for this increase are unknown. Formate addition to the transformation reactor gave higher T-C and T-Y for 2-day SRT growth reactor conditions and significantly lower T-C, T-Y, and k(TCE)/K-S,K-TCE for 8-day SRT N-limited conditions. Methane addition to the transformation reactor inhibited TCE cometabolism at low TCE concentrations and enhanced TCE cometabolism at high TCE concentrations, indicating that the TCE cometabolism in the presence of methane does not follow simple competitive inhibition kinetics.