A phenol-degrading thermophilic bacterium, designated Bacillus sp. A2, was isolated from a water and mud sample from a hot spring in Iceland. The aerobic isolate grew optimally on phenol at 65 degrees C. At 70 degrees C, 85% of the optimal growth rate was still observed. No growth was observed at 40 degrees C and 75 degrees C. Bacillus sp. A2 is a gram-positive spore-forming rod. According to 16S rDNA analysis Bacillus sp. A2 is closely related to Bacillus stearothermophilus, Bacillus kaustophilus and Bacillus thermoleovorans. Bacillus sp. A2 degraded phenol completely in concentrations up to 5 mM. In addition, all three isomers of cresol were utilized as sole carbon and energy sources. The degradation of phenols proceeds via the meta-cleavage pathway and the enzymes involved in its degradation are constitutively expressed.