A novel bioreactor for the biodegradation of toxic aromatic solvents, such as benzene, toluene, and xylenes in liquid effluent stream, was developed. Silicon tubing was immersed in the completely mixed and aerated bioreactor, and liquid toluene as a model solvent was circulated within the tubing. Toluene diffused out of the tube wall and was transferred at high rate into the culture broth, where biodegradation occurred. The effect of operating parameters on the toluene transfer rate was investigated. During continuous operation, the biodegradation rate was considerably higher than those obtained using conventional methods. A mathematical model was established for continuous biodegradation, and simulation results coincided with the experimental results. The performance and operational criteria of the bioreactor were analyzed on the basis of both the experimental and simulation results.