Most bacteria and their enzymes are destroyed or inactivated in the presence of organic solvents. Organic solvent tolerant bacteria are a relatively novel group of extremophilic microorganisms that combat these destructive effects and thrive in the presence of high concentrations of organic solvents as a result of various adaptations. These bacteria are being explored for their potential in industrial and environmental biotechnology, since their enzymes retain activity in the presence of toxic solvents. This property could be exploited to carry out bioremediation and biocatalysis in the presence of an organic phase. Because a large number of substrates used in industrial chemistry, such as steroids, are water-insoluble, their bioconversion rates are affected by poor dissolution in water. This problem can be overcome by carrying out the process in a biphasic organic-aqueous fermentation system, wherein the substrate is dissolved in the organic phase and provided to cells present in the aqueous phase. In bioprocessing of fine chemicals such as cis-diols and epoxides using such cultures, organic solvents can be used to extract a toxic product from the aqueous phase, thereby improving the efficiency of the process. Bacterial strains reported to grow on and utilize saturated concentrations of organic solvents such as toluene can revolutionize the removal of such pollutants. It is now known that enzymes display striking new properties in the presence of organic solvents. The role of solvent-stable enzymes in nonaqueous biocatalysis needs to be explored and could result in novel applications.