In this research, benzene, a toxic compound encountered in industrial wastewater, was extracted using a mixture of saponin and sodium dodecyl sulfate (SDS) as anionic surfactants. Also, a biosensor system for assessment of toxicity and detection of extracted benzene was designed using the Luc strains of luminescent Escherichia coli. Results showed saponin and SDS were synergistic for the extraction of benzene. An optimal hydrophilic-lipophilic balance value for extraction was determined to be about 24.1, representing a mixture of 40 wt% SDS and 60% saponin. Under optimal conditions, the concentration of extracted benzene in extraction phase reached 27 ppm. When extracted benzene solution was injected into the biosensor system, the luminescence level of biosensor decreased dramatically, reflecting toxicity. The concentration of benzene in the extracted solution correlated well with toxicity levels measured by the biosensor system. Using the luminescence biosensor system, the halfmaximal effective concentration (EC 50 ) value of benzene was about 26.2 ppm. Our results demonstrate that the designed biosensor system has good sensitivity for toxicity assessment of extracted benzene, and therefore can be proposed as an approach to detect of benzene and other toxic compounds in wastewater.