Escherichia coli JM101(pSPZ3), containing xylene monooxygenase (XMO) from Pseudomonas putida mt-2, catalyzes specific oxidations and reductions of m-nitrotoluene and derivatives thereof. In addition to reactions catalyzed by XMO, we focused on biotransformations by native enzymes of the E. coli host and their effect on overall biocatalyst performance. While m-nitrotoluene was consecutively oxygenated to m-nitrobenzyl alcohol, m-nitrobenzaldehyde, and m-nitrobenzoic acid by XMO, the oxidation was counteracted by an alcohol dehydrogenase(s) from the E. coli host, which reduced m-nitrobenzaldehyde to m-nitrobenzyl alcohol. Furthermore, the enzymatic background of the host reduced the nitro groups of the reactants resulting in the formation of aromatic amines, which were shown to effectively inhibit XMO in a reversible fashion. Host-intrinsic oxidoreductases and their reaction products had a major effect on the activity of XMO during biocatalysis of m-nitrotoluene. P. putida DOT-T1E and P. putida PpS81 were compared to E. coli JM101 as alternative hosts for XMO. These promising strains contained an additional dehydrogenase that oxidized m-nitrobenzaldehyde to the corresponding acid but catalyzed the formation of XMO-inhibiting aromatic amines at a significantly lower level than E. coli JM101.