A strain of Pseudomonas stutzeri was isolated form an enrichment of perchlorate reducing bacteria from the formation water collected from an Indian coalbed which solubilized coal and produced copious amount of biosurfactant when coal was added to the medium. It produced maximum biosurfactant with lignite coal followed by olive oil and soybean oil which was able to emulsify several aromatic hydrocarbons including kerosene oil, diesel oil, hexane, toluene etc. Haemolytic test, growth inhibition of Bacillus subtilis and FTIR analysis showed rhamnolipid nature of the biosurfactant. The stability of the coal induced biosurfactant in pH range of 4-8 and up to 25% NaCl concentration and 100 degrees C temperature suggests that due to its ability to produce biosurfactant and solubilize coal P. stutzeri may be useful in the coalbed for in situ biotransformation of coal into methane and in the bioremediation of PAHs from oil contaminated sites including marine environments. (C) 2012 Elsevier Ltd. All rights reserved.