The possibility of operating a two-phase partitioning bioreactor for phenol degradation in continuous mode has been explored in this paper, using a mechanistic model for the bioreactor. Characteristics of continuous culture fermentations with substrate inhibition were investigated using steady-state and dynamic simulations. The simulations confirmed that over certain ranges of aqueous dilution rates, up to three steady states for the cell and substrate concentrations could be obtained. These corresponded to stable and unstable steady states, as well as washout conditions. The unstable nature of the steady states was examined for two different operating regions representing extremes of solvent dilution rate and feed substrate concentration. Step decreases in feed substrate concentration, when operating at the unstable steady state, resulted in the system reaching a stable steady state, while step increases in feed substrate concentration eventually resulted in the system washing out. Dynamic simulations also revealed variations in the sensitivity of the continuous model to substrate concentrations, depending on the operating point. This variation indicates non-linearity in dynamic behaviour. (C) 2000 Elsevier Science Ltd. All rights reserved.