This paper presents a parametric study simulating light transfer in a photobioreactor containing gas bubbles and filamentous cyanobacteria Anabaena variabilis suspended in water. To the best of our knowledge, this paper presents for the first time a model for such system: (i) using a consistent set of radiation characteristics of the medium derived from experimental data and from Mile theory; (ii) accounting for anisotropic scattering by both the bubbles and the filamentous microorganisms; (iii) considering the spectral dependency of radiation characteristics in the spectral range from 400 to 700 nm using a box model, and (iv) evaluating light transfer in a photobioreactor containing genetically engineered microorganisms with reduced pigment content. The steady-state one-dimensional radiation transfer equation is solved using the modified method of characteristics and a quadrature with 24 directions per hemisphere adapted to forward scattering media. The parameters investigated include the bacteria concentration, the bubble radius, and the void fraction, as well as the approximate scattering phase function. It was established that the strongly forward scattering by the bubbles must be accounted for and the truncated phase function (TPF) is recommended. In the absence of bubbles, ignoring in-scattering by the bacteria leads to errors as high as 20%. On the other hand, accounting for in-scattering with isotropic phase function gives acceptable results. Moreover, genetically reducing the pigment content of the microorganisms by an order of magnitude increases the significance of forward scattering of light by the microorganisms. This in turn, increases the penetration depth and can be accounted for by either the Henyey-Greenstein or the TPF approximations. Finally, the model presented can also be applied to (i) other types of microorganisms such as unicellular green algae or photosynthetic bacteria, (ii) different photobioreactor processes such as food product or pharmaceutical production, or (iii) photochemical reactors. (C) 2007 International Association for Hydrogen Energy. Published by Elsevier Ltd. All rights reserved.