Methylobacterium dichloromethanicum DM4 is able to grow with dichloromethane as the sole carbon and energy source by using a dichloromethane dehalogenase/glutathione S‐transferase (GST) for the conversion of dichloromethane to formaldehyde. Mammalian homologs of this bacterial enzyme are also known to catalyze this reaction. However, the dehalogenation of dichloromethane by GST T1‐1 from rat was highly mutagenic and toxic to methylotrophic bacteria. Plasmid‐driven expression of rat GST T1‐1 in strain DM4‐2cr, a mutant of strain DM4 lacking dichloromethane dehalogenase, reduced cell viability 105‐fold in the presence of dichloromethane. This effect was exploited to select dichloromethane‐resistant transconjugants of strain DM4‐2cr carrying a plasmid‐encoded rGSTT1 gene. Transconjugants that still expressed the GST T1 protein after dichloromethane treatment included rGSTT1 mutants encoding protein variants with sequence changes from the wild‐type ranging from single residue exchanges to large insertions and deletions. A structural model of rat GST T1‐1 suggested that sequence variation was clustered around the glutathione activation site and at the protein C‐terminus believed to cap the active site. The enzymatic activity of purified His‐tagged GST T1‐1 variants expressed in Escherichia coli was markedly reduced with both dichloromethane and the alternative substrate 1,2‐epoxy‐3‐(4′‐nitrophenoxy)propane. These results provide the first experimental evidence for the involvement of Gln102 and Arg107 in catalysis, and illustrate the potential of in vivo approaches to identify catalytic residues in GSTs whose activity leads to toxic effects.