X-ray absorption near-edge structure spectroscopy (XANES) was successfully employed to determine the gold valence in the metal-reducing bacterium Shewanella algae after exposure to a 1 mM aqueous HAuCl4 solution for 10-120 min. XANES spectra revealed the oxidation state of gold in the bacterial cells to be Au(0) without any contribution from Au(Ill), demonstrating that S. algae cells can reduce AuCl4- ions to elemental gold. Transmission electron microscopy (TEM) and energy dispersive X-ray (EDX) analysis confirmed that gold nanoparticles 5-15 nm in size were deposited in the periplasmic space of the bacterial cells; a preferable, cell surface location for the easy recovery of biogenic nanoparticles.