A new type of bioreactor, an inverse fluidized-bed biofilm reactor, was used for the continuous aerobic biodegradation of phenol in contaminated water. The process proved to be very stable in time, with a constant and high rate of biodegradation obtained during the three-month operation of the bioreactor. This was because of the efficient and simple biofilm thickness control. The effect of the dilution rate on the rate of phenol biodegradation was studied at different inlet phenol concentrations. The biodegradation rate was found to pass through a maximum. Using a kinetic model, this effect was explained by the presence of a large amount of suspended biomass, produced during the biofilm thickness control in the bioreactor.