Hydrogenophaga palleronii LHJ38 can grow on naphthalene as sole carbon and energy source. The growth and naphthalene degradation curve of the strain were determined in biphase and monophase system respectively. The growth and naphthalene degradation capacity of cells obtained from oil phase and aqueous phase were compared carefully. The maximum biomass of 4.248g/L was obtained after cultivating 72h under the optimum conditions of 30 mL paraffin oil and 2g naphthalene in 1L mineral salt medium. In the biphase system, the naphthalene degradation capacity of Hydrogenophaga palleronii LHJ38 was higher more than 2 times than that in the monophase system. The naphthalene (2g/L) can be degraded completely in 132h when the concentration of cell was 2 mg dry weight cell/mL. The naphthalene degradation rate of cells obtained from oil phase was 2.7 fold as fast as that of cells obtained from aqueous phase.