An unadapted mixed methanogenic sludge transformed formaldehyde into methanol and formate. The methanol to formate ratio obtained was 1:1. Formaldehyde conversion proceeded without any lag phase, suggesting the constitutive character of the formaldehyde conversion enzymes involved. Because the rate of formaldehyde conversion declined at increased formaldehyde additions, we hypothesized that some enzymes and/or cofactors might become denatured as a result of the excess of formaldehyde. Furthermore, formaldehyde was found to be toxic to acetoclastic methanogenesis in a dual character. Formaldehyde toxicity was partly reversible because once the formaldehyde concentration was extremely low or virtually removed from the system, the methane production rate was partially recovered. Because the degree of this recovery was not complete, we conclude that formaldehyde toxicity was partly irreversible as well, The irreversible toxicity likely can be attributed to biomass formaldehyde-related decay. Independent of the mode of formaldehyde addition (i.e., slug or continuous), the irreversible toxicity was dependent on the total amount of formaldehyde added to the system. This finding suggests that to treat formaldehyde-containing waste streams, a balance between formaldehyde-related decay and biomass growth should be attained.