Alcaligenes sp. d(2) isolated from soil was earlier reported as a potent phenol-degrading organism. In the Fourier transform/infrared spectroscopic analysis of the biodegraded sample, the aromatic stretching was missing and the spectrum gave evidence for the presence of polyhydroxybutyric acid along with its depolymerized products. In the gas chromatogram of the biodegraded sample, the peak of phenol at 14.997 min was absent and there were many peaks after 20 min. The organism could carry out 100% degradation of phenol in 32 h and could progressively result in early accumulation of polyhydroxybutyrate (PHB) intracellularly from 8 h onwards. The various conditions optimized for the maximum accumulation of intracellular PHB were pH 7.0, incubation time 24 h, phenol concentration 15 mg/100 ml, and ammonium sulfate concentration 25 mg/100 ml.