The chlorinated nitroaromatic antibiotic chloramphenicol (CAP) is a refractory contaminant that is widely present in various environments. However, few CAP-mineralizing bacteria have been documented, and a complete CAP catabolism pathway has yet to be identified. In this study, the bacterial strain Sphingobium sp. CAP-1 was isolated from an activated sludge sample and was shown to be capable of aerobically subsisting on CAP as the sole carbon, nitrogen, and energy source while simultaneously and efficiently degrading CAP. p-Nitrobenzoic acid (PNBA), p-nitrobenzaldehyde (PNBD), protocatechuate (PCA), and the novel side chain C3-hydroxy-oxygenated product of CAP (O-CAP) were identified during CAP degradation. Strain CAP-1 was able to convert O-CAP to intermediate product PNBA. The putative functional genes associated with PNBA catabolism into the tricarboxylic acid cycle via PCA and floc formation were also identified by genome sequencing and comparative proteome analysis. A complete pathway for CAP catabolism was proposed. The discovery of a novel CAP oxidation/detoxification process and a complete pathway for CAP catabolism enriches the fundamental understanding of the bacterial catabolism of antibiotics, providing new insights into the microbial-mediated fate, transformation, and resistance risk of CAP in the environment. The molecular basis of CAP catabolism and floc formation in strain CAP-1 also offers theoretical guidance for the enhanced bioremediation of CAP-containing environments.