Based on the results of phenotypic features, phylogenetic similarity of 16S rRNA gene sequences and BIOLOG test, a soil bacterium was identified as Bacillus sp. DM-1. Using either growing cells or a cell-free extract, it transformed parathion and methyl parathion to amino derivatives by reducing the nitro group. Pesticide transformation by a cell-free extract was specifically inhibited by three nitroreductase inhibitors, indicating the presence of nitroreductase activity. The nitroreductase activity was NAD(P)H-dependent, O2-insensitive, and exhibited the substrate specificity for parathion and methyl parathion. Reductive transformation significantly decreased the toxicity of pesticides.