A 26 kilobase BamHI restriction endonuclease DNA fragment has been cloned from Pseudomonas pickettii PKO1, a strain isolated from a soil microcosm that had been amended with benzene, toluene, and xylene. The DNA fragment, cloned into vector plasmid pRO1727 and designated pRO1957, allowed P. aeruginosa PAO1c to grow on phenol as sole source of carbon. Physical and functional restriction endonuclease maps have been derived for the cloned DNA fragment. Deletion and subcloning analyses of these fragments indicated that the gene encoding phenol hydroxylase is positively regulated. Phenol and m-cresol were shown to be inducers of the enzyme. o-Cresol and p-cresol did not induce enzymatic activity, but could be metabolized by cells that had been previously exposed to phenol or m-cresol, moreover the enzyme was sensitive to thiol-inhibiting reagents. A novel polypeptide with an estimated molecular mass of 80,000 daltons was detected in extracts of phenol-induced cells of P. aeruginosa carrying plasmid pRO1959.