Cyclodextrins (CyDs) complexes with vanadium-substituted heteropoly acids (PMoVn-beta-CyDs, n = 1, 2) were prepared by simple mixing and their structures were characterized by FT-IR. Among various catalysts, PMoV1-beta-CyDs, an efficient phase transfer catalyst, exhibited the highest yield (13.1%) of phenol without observing the formation of catechol, hydroquinone and benzoquinone in direct hydroxylation of benzene to phenol in 80 vol% aqueous acetic acid with molecular oxygen and ascorbic acid used as the oxidant and the reducing reagent, respectively. The influences of the reaction temperature, the pressure of oxygen, the amount of ascorbic acid, the amount of catalyst, and the reaction time on the yield of phenol were investigated to obtain the optimal reaction conditions for phenol formation.