An upflow anaerobic sludge blanket (UASB) reactor operated at 37°C, one-day hydraulic retention plus effluent recycle, was able to degrade up to 98% of phenol and 20% of m-cresol without a carbohydrate co-substrate, for wastewaters containing up to 900 mg/l of phenol and 320 mg/l of m-cresol. Further increases of phenol and m-cresol concentration in wastewater impaired the phenol-degrading of the biomass activity. However, biomass was able to regain activity once the phenolic concentrations were lowered. In treating a wastewater containing 600 mg/l of phenol, m-cresol had a threshold toxicity of 600-800 mg/l in a continuous reactor; but in a batch reactor the toxicity was progressive with a IC(50) value of 330 mg/l. The absence of intermediate acids in the reactor effluent and other results of batch experiments suggested that the initial acidogenesis was likely to be the rate-limiting step for phenol degradation, instead of the subsequent acetogenesis or methanogenesis.