The present study investigates the bioremediation of waste engine oil at both dissolved or being suspended in oily wastewater using an actinobacterium, Gordonia terrae DSM 43249 strain isolated from East Kolkata wetlands. The isolated strain was found capable of sustaining in highly toxic oil contaminated wastewater and simultaneously can efficiently biodegrade the pollutants in both simulated fresh and marine water system at optimized environmental conditions. Moreover, in order to understand the effect of physical presence of oil in oily wastewater on the bioremediation process, three types of simulated oil-water forms were studied: water with free waste engine oil, oil-water mixture in the form of coarse emulsion and microemulsion. It was observed that the percentage degradation became maximum with the microemulsion form (72.73%) followed by the coarse one (65.45%). The minimum percentage degradation of 39.74% was seen with the free oil. Statistical interpretation also revalidates the experimental observations, showing that the oil percentage degradation is much sensitive to the oil and water composition in an oily-water system (F=772.64> Fcritical =5.143). Hence, it is presumed from the present study that such a high percentage degradation of oil especially, when oil is thoroughly mixed with water, can be considered as one of the potential applications for oil treatment such as during oil spillage using G.terrae DSM 43249.