A strictly anaerobic gram-positive, rod-shaped bacterium, strain LuPhetl, was isolated from sewage sludge with phenoxyethanol as sole carbon and energy source, and was assigned to the genus Acetobacterium. The new isolate fermented the alkylaryl ether compound phenoxyethanol stoichiometrically to phenol and acetate, whereas phenoxyacetic acid was not degraded. In cell-free extracts of strain LuPhetl, cleavage of the ether linkage was shown, and acetaldehyde was detected as reaction product. Coenzyme A-dependent acetaldehyde : acceptor oxidoreductase, phosphate acetyltransferase, acetate kinase, and carbon monoxide dehydrogenase were measured in cell-free extracts of this strain. Our results indicate that the ether linkage of phenoxyethanol is cleaved by a shift of the hydroxyl group to the subterminal carbon atom, analogous to a corrinoid-dependent diol dehydratase reaction, to form an unstable hemiacetal that releases phenol and acetaldehyde. Obviously, phenoxyethanol is degraded by the same strategy as in anaerobic degradation of the alkyl ether polyethylene glycol.