The nematode, Caenorhabditis elegans, can be grown in liquid culture media supplemented with bacteria as a food source, but growth is limited primarily by lack of oxygen. A novel two-phase liquid culture system has been developed in which the nematodes were grown at an interface between a lower layer of perfluorocarbon and an upper layer of aqueous S medium containing bacteria. By using degassed perfluorodecalin, nematode growth over 3 days was slightly less than in S medium controls above a plastic substrate; however, this difference in growth rate was barely significant over five replica runs. By using oxygen-saturated perfluorodecalin, growth over 3 days was significantly enhanced, as compared both to S-medium controls and to cultures over degassed perfluorodecalin. This much larger effect is attributable to improved oxygenation at the interface on which the worms move. Measurements with an oxygen electrode suggest that dissolved oxygen concentrations were greatly depleted in both the perfluorocarbon and aqueous layers after 24 h. However, during standard 7-h toxicity tests in aqueous media, an underlying layer of oxygenated perfluorocarbon significantly enhanced the sensitivity of PC72 transgenic (hsp16/lacZ) worms to cadmium, increasing expression of the reporter product, beta-galactosidase. The utility of this culture system for controlling oxygen availability during nematode growth and toxicity assays is discussed.