The bioconversion of methyl-testosterone to methandienone in a biphasic system was studied using freeze-dried, thawed and growing Arthrobacter simplex AS 1.94* cells as biocatalyst. The biphasic system consists of an organic phase [30% (v/v)] with steroid 10g/L and an aqueous phase [70% (v/v)] containing the cells (5g.d.c.w/L). Carbon tetrachloride and Tween-80 were used as organic solvent and surfactant, respectively, and menadione was added as an external electron acceptor. The factors affecting the conversion rate in the two-phase system were investigated. The results showed that menadione was necessary in this system. Small amounts of product added to the reaction system can increase the dehydrogenation rate. Higher activities were obtained with thawed cells as compared to the freeze-dried and growing cells. Under the optimal operation conditions, more than 95% (w/w) of added methyl-testosterone could be converted to methandienone within 48h. Also, an easy way to recover the product in a high purity is proposed.