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Phenol, a monocyclic aromatic hydrocarbon with various commercial uses, is a major pollutant in industrial wastewater. Euglena gracilis is a unicellular freshwater flagellate possessing secondary chloroplasts of green algal origin. This protist has been widely used for monitoring the biological effect of various inorganic and organic environmental pollutants, including aromatic hydrocarbons. In this study, we evaluate the influence of different phenol concentrations (3.39 mM, 3.81 mM, 4.23 mM, 4.65 mM, 5.07 mM, 5.49 mM and 5.91 mM) on the growth, morphology and cell division of E. gracilis. The cell count continually decreases (p < 0.05–0.001) over time with increasing phenol concentration. While phenol treatment does not induce bleaching (permanent loss of photosynthesis), the morphological changes caused by phenol include the formation of spherical (p < 0.01–0.001), hypertrophied (p < 0.05) and monster cells (p < 0.01) and lipofuscin bodies. Phenol also induces an atypical form of cell division of E. gracilis, simultaneously producing more than 2 (3–12) viable cells from a single cell. Such atypically dividing cells have a symmetric “star”-like shape. The percentage of atypically dividing cells increases (p < 0.05) with increasing phenol concentration. Our findings suggest that E. gracilis can be used as bioindicator of phenol contamination in freshwater habitats and wastewater.