A thermotolerant bacterium, designated as PHS1, was isolated from a hot spring in Pohang, Korea, on the basis of its ability to grow on benzene, toluene, ethylbenzene, and xylenes (BTEX) as a sole carbon source. Strain PHS1 is a gram-negative, rod-shaped aerobe and grows optimally at 42 degreesC and pH 7.2. According to 16 S rDNA analysis, strain PHS1 showed highest similarity to Ralstonia eutropha (previously named Alcaligenes eutrophus). Unlike its closest known Ralstonia species, however, strain PHS1 was able to utilize toluene, ethylbenzene, o-xylene, and both m- and o-cresol. The degradation of o-xylene, by strain PHS I is particularly important, since o-xylene is a compound of considerable environmental interest, owing to its recalcitrance; and very few microorganisms have been reported to utilize o-xylene as a sole carbon source. It was found that strain PHS1 transformed o-xylene to 2,3-dimethylphenol through direct oxygenation of the aromatic ring. The unique properties of strain PHS1, such as thermotolerance and the ability to degrade o-xylene, may have important implications for the treatment of BTEX-contaminated industrial effluents.