Bacteria that grow on p-xylene, p-toluic acid, and terephthalic acid (TPA) were isolated from a waste-water bioreactor that is used to treat a waste stream that contains all three of these compounds. Although previously described aerobic bacteria degrade p-xylene by initially oxidizing a single methyl group to form p-toluic acid and then cleaving the aromatic ring, some of the bacteria isolated during this study transformed p-xylene by oxidizing both methyl groups to produce TPA.