Immobilized growing cells of Candida tropicalis were prepared by entrapment into polyacrylamide (PAA) gel beads. Continuous degradation was conducted with inlet phenol concentration ranging from 1000 up to 5000mgl −1 . It was found that inlet concentrations of 4000 and 5000mg1 −1 took less than 5 and 10 days, respectively, to achieve a phenol removal efficiency of over 95%. The maximum biodegradation rate of 7.68gl −1 per day was reached at the inlet concentration of 5000mgl −1 . The formation of PAA gel beads was accomplished in aqueous phase associated with the gelling reaction of Ca-alginate. Effects of monomer concentration and crosslinkerlinker content on the diffusivity of phenol in gel beads were studied. The oxygen diffusivity in gel beads was estimated according to a well-known theoretical model using experimental data. It was found that the ratio of oxygen diffusivity in gel beads to that in water was around 30%. The immobilized-cell beads were used to degrade phenol in an air-lift bioreactor undergoing continuous operation at a constant hydraulic retention time of 15h (dilution rate 0.067h −1 ).