Summary Comamonas sp. rN7 is a phenol‐degrading bacterium that represents the dominant catabolic population in activated sludge. The present study examined the utility of this bacterium for establishing foreign catabolic genes in phenol‐digesting activated sludge. The phc genes coding for phenol hydroxylase and its transcriptional regulators of C. testosteroni R5 were integrated into the chromosome of strain rN7. The specific phenol‐oxygenating activity of a resultant transformant designated rN7(R503) was three times higher than the activity of strain rN7, and the phc genes were stably inherited by rN7(R503) grown in a non‐selective laboratory medium. Inoculation of phenol‐acclimatized activated sludge with rN7(R503) resulted in a high phenol‐oxygenating activity and improved resistance to phenol‐shock loading compared to sludge inoculated with either no cells, rN7 or R5. Quantitative competitive polymerase chain reaction (PCR) showed that the phc genes were retained in the rN7(R503)‐inoculated sludge at a density of more than 10 8 copies per ml of mixed liquor for more than 35 days, whereas those in the R5‐inoculated sludge disappeared rapidly. No transfer of the phc genes to other indigenous populations was apparent in the rN7(R503)‐harbouring sludge. From these results, we concluded that the phenol treatment of the activated sludge was enhanced by the phc genes harboured by the rN7(R503) population. This study suggests a possible bioaugmentation strategy for stably utilizing foreign catabolic genes in natural ecosystems.