As a new member of demulsifier family, biodemulsifier is applied in oil-water emulsion breaking. A strain, XJ-T-1, was isolated from petroleum-contaminated soil and identified as Alcaligenes sp.. Its physicochemical properties, demulsification capability and utilization of waste oil were further investigated. With waste frying oil (WFO) as carbon source, the demulsifier produced by Alcaligenes sp. showed high demulsifying capability. Moreover, the production of demulsifier was 4.6 times of that generated with paraffine as the carbon source. The CMC(-1) of biodemulsifier produced by paraffine and waste frying oil was achieved at 10 and 20, respectively. The biodemulsifier cultured with paraffine as the carbon source achieved 96% and 50% of emulsion breaking ratio in W/O (water in oil) and O/W (oil in water) model emulsion, while the demulsifier cultured on waste frying oil II as carbon source exhibited 97.8% and 65% demulsification ratio in the two model emulsions correspondingly. From the dynamic change of kerosene breaking ratio, emulsion breaking ratio and water breaking ratio during demulsification process, it was found that this biodemulsifier reacted with the continuous phase of the emulsion prior to its reaction with the dispersed phase. It was identified the valid part of biodemulsifier produced by WFO II was lipopeptide by TLC and IR.