Continuous degradation of phenol from 100 mg/l to concentrations as low as 2.5 mg/l with immobilized Pseudomonas putida was achieved. Increase in dilution rate increased degradation rate but only to 0.6 h(-1) beyond which effluent phenol concentration began to rise. However, effluent concentration could be held to <10 mg/ml by proportionally increasing bead quantity when the dilution rate was increased. Under such operation, phenol was removed at rates that increased in proportion to the increase in dilution rate, with 108 mg/l/h being the highest degradation rate achieved. At dilution rates above 0.3 h(-1), the immobilized cell system studied was better at degrading phenol than a free cell system. Superiority of the immobilized cell system was more pronounced the higher the dilution rate used. Other findings were that pH 5.5 to 6.0, temperatures between 25 degrees C and 30 degrees C, and a bead diameter between 1 and 2 mm were found to be optimal for phenol degradation at low levels.