Tetramethrin is a pyrethroid insecticide that is commonly used worldwide. The toxicity of this insecticide into the living system is an important concern. In this study, a novel tetramethrin-degrading bacterial strain named A16 was isolated from the activated sludge and identified as Gordonia cholesterolivorans. Strain A16 exhibited superior tetramethrin degradation activity, and utilized tetramethrin as the sole carbon source for growth in a mineral salt medium (MSM). High-performance liquid chromatography (HPLC) analysis revealed that the A16 strain was able to completely degrade 25 mg·L−1 of tetramethrin after 9 days of incubation. Strain A16 effectively degraded tetramethrin at temperature 20–40 °C, pH 5–9, and initial tetramethrin 25–800 mg·L−1. The maximum specific degradation rate (qmax), half-saturation constant (Ks), and inhibition constant (Ki) were determined to be 0.4561 day−1, 7.3 mg·L−1, and 75.2 mg·L−1, respectively. The Box–Behnken design was used to optimize degradation conditions, and maximum degradation was observed at pH 8.5 and a temperature of 38 °C. Five intermediate metabolites were identified after analyzing the degradation products through gas chromatography–mass spectrometry (GC-MS), which suggested that tetramethrin could be degraded first by cleavage of its carboxylester bond, followed by degradation of the five-carbon ring and its subsequent metabolism. This is the first report of a metabolic pathway of tetramethrin in a microorganism. Furthermore, bioaugmentation of tetramethrin-contaminated soils (50 mg·kg−1) with strain A16 (1.0 × 107 cells g−1 of soil) significantly accelerated the degradation rate of tetramethrin, and 74.1% and 82.9% of tetramethrin was removed from sterile and non-sterile soils within 11 days, respectively. The strain A16 was also capable of efficiently degrading a broad spectrum of synthetic pyrethroids including D-cyphenothrin, chlorempenthrin, prallethrin, and allethrin, with a degradation efficiency of 68.3%, 60.7%, 91.6%, and 94.7%, respectively, after being cultured under the same conditions for 11 days. The results of the present study confirmed the bioremediation potential of strain A16 from a contaminated environment.