Reconstituted whole-cell preparations of lyophilized Methylosinus trichosporium OB3b were used to demonstrate soluble methane monooxygenase activity in a two-phase (biphasic) matrix consisting of a buffered aqueous phase and 2,2,4-trimethylpentane (isooctane), The rate of conversion of gaseous propylene to propylene oxide, a non-metabolized liquid, was used as the primary measure of enzyme activity. Appreciable soluble methane monooxygenase activity was detected when the volume of the aqueous phase represented at least 1% of the total volume, although the initial rate of product formation did increase as the volume of the aqueous phase increased. In comparison to the aqueous system, the specific rate and yields in the biphasic system were much less sensitive to increases in the concentrations of formate and protein (the methane monooxygenase). However, there was some evidence that the enzyme system was more stable in the biphasic matrix, since the rate of propylene oxide formation remained linear for an extended period of time, V-(app.) in the biphasic system decreased by a factor of 0.6 relative to the same parameter in the aqueous system. Conversely, K-m(app.) for propylene was 1.6 times greater in the biphasic system. Hence, the apparent catalytic efficiency in the aqueous system was four times that in the biphasic system, as indicated by a decrease in the corresponding ratios of V-(app.)to K-m(app.).