Selective enrichments yielded bacterial cultures able to utilize the osmolyte N-methyltaurine as sole source of carbon and energy or as sole source of fixed nitrogen for aerobic growth. Strain MT1, which degraded N-methyltaurine as a sole source of carbon concomitantly with growth, was identified as a strain of Alcaligenes faecalis. Stoichiometric amounts of methylamine, whose identity was confirmed by matrix-assisted, laser-desorption ionization time-of-flight mass spectrometry, and of sulfate were released during growth. Inducible N-methyltaurine dehydrogenase, sulfoacetaldehyde acetyltransferase (Xsc) and a sulfite dehydrogenase could be detected. Taurine dehydrogenase was also present and it was hypothesized that taurine dehydrogenase has a substrate range that includes N-methyltaurine. Partial sequences of a tauY-like gene (encoding the putative large component of taurine dehydrogenase) and an xsc gene were obtained by PCR with degenerate primers. Strain N-MT utilized N-methyltaurine as a sole source of fixed nitrogen for growth and could also utilize the compound as sole source of carbon. This bacterium was identified as a strain of Paracoccus versutus. This organism also expressed inducible (N-methyl)taurine dehydrogenase, Xsc and a sulfite dehydrogenase. The presence of a gene cluster with high identity to a larger cluster from Paracoccus pantotrophus NKNCYSA, which is now known to dissimilate N-methyltaurine via Xsc, allowed most of the overall pathway, including transport and excretion, to be defined. N-Methyltaurine is thus another compound whose catabolism is channelled directly through sulfoacetaldehyde.