Aflatoxin is a mycotoxin produced by Aspergillus flavus and a common contaminant of food and feed, posing health hazards to humans and animals alike. The aim of this study is to explore the ability of Pseudomonas putida to degrade aflatoxin B1 (AFB1). The toxigenic strain of A.flavus was isolated from sugarcane and used to produce AFB1 in yeast extract sucrose medium. Two P.putida strains, MTCC 1274 and 2445, were cultured in mineral salt glucose medium (MSG) containing AFB1. The AFB1 was analyzed qualitatively and quantitatively by TLC and HPLC. It was found that Pseudomonas sp. can tolerate AFB1 in the medium (0.2μgml-1), and degrades it very efficiently. Within 24h of incubation, AFB1 was reduced to an undetectable level in MSG medium. Analysis with TLC, HPLC, UV spectrophotometer, gas chromatography mass spectrometry (GC-MS), and Fourier transform infra-red spectroscopy (FT-IR) showed that AFB1 was bio-transformed to structurally different compounds (AFD1, AFD2, and AFD3), with the modified furan and lactone ring on the AFB1 molecule. A toxicity study on the HeLa cells showed that the new compounds formed are less toxic when compared with AFB1. © 2013 Elsevier Ltd.