Abstract The novel Methylobacterium sp. GPE1 strain was isolated from a former gasworks site. GPE1 was able to utilise carbazole as a sole source of carbon and energy. Its ability to produce surface-active compounds was investigated by monitoring the biomass and surface tension. During the adaptation phase, the GPE1 cells cultured on carbazole (9.9 mg l −1 ) showed an unexpected change in the surface tension of the culture. The biodegradation process seemed to be initiated by the production of the biosurfactant. The appearance of an early log phase caused decrease of surface tension which reached its minimal value, equal to 61 mN m −1 . The later surface tension changes were corresponding to biomass concentration and reached the control level at the end of experiment. In the 20 day experimental period, GPE1 utilised 87% of carbazole, giving the following values: μ = 0.08 h −1 , Y xs = 0.62 gC gC −1 . The Microtox™ toxicity assay was conducted for centrifuged and filtered water solutions of cultures and abiotic samples. The samples after biodegradation revealed the increased toxicity determined by luminescence inhibition which increased from 15.2% to 33%. Although the biosurfactant produced by GPE1 was not identified, its relation with signal molecules, which are often present in Methylobacterium sp. representatives, is being discussed.