Two-liquid-phase partitioning bioreactors (TPPBs) consist of an aqueous phase containing microorganism cells and a water-immiscible, non-bioavailable organic phase, and have been investigated for use in bioconversion of toxic, hydrophobic chemicals. We achieved a toluene conversion rate 10-fold faster than an experimental data previously demonstrated, using a novel bacterium in a TPPB employing silicone oil. The bacterium was a bald mutant of toluene-degrading Acinetobacter sp. Tol 5, which has numerous filamentous cell appendages, hydrophobic cell surfaces, adheres to solid surfaces, and self-agglutinates. The bald mutant cells lack the appendages, have decreased adhesiveness to solid surfaces, retain the hydrophobic cell surface, and reversibly adsorb to the surface of oil droplets dispersed in an aqueous phase. The effects of toluene concentration, aqueous and oil phase volume ratios, and cell concentration on the initial conversion rate of toluene were investigated. Volume ratios did not significantly affect conversion rate, and the rate greater than 1 g/(l.h) was attained even in W/O emulsion containing 80% oil. As cell concentration increased, the volumetric conversion rate increased, but the specific conversion rate decreased. The highest volumetric conversion rate, 3.1 g/(l.h), was achieved using 8.20 g/l cells in a TPPB containing 20% oil.