The Gluconobacter oxydans M5 with disruption of the pyrroloquinoline quinine-dependent membrane-bound aldehyde dehydrogenase (ALDH) was used for the oxidation of benzyl alcohol. The selectivity toward benzaldehyde showed an obvious increase for the engineered strain, which reached the 67.3%, while the wild strain had only 2.8%. Meantime, the aqueous/isooctane (1: 1) biphasic system was used for the further improvement of selectivity. By these methods, nearly 100% selectivity and conversion rate could be obtained within 1 h at the optimum initial benzyl alcohol concentration of 5.0 g/l.