This work describes the design and performance of a thiosulfate-oxidizing bioreactor that allowed high elemental sulfur production and recovery efficiency. The reactor system, referred to as a Supernatant-Recycling Settler Bioreactor (SRSB), consisted of a cylindrical upflow reactor and a separate aeration vessel. The reactor was equipped with an internal settler and packing material (structured corrugated PVC sheets) to facilitate both cell retention and the settling of the formed elemental sulfur. The supernatant from the reactor was continuously recirculated through the aerator. An inlet thiosulfate concentration of 100 mmol l(-1) was used. The reactor system was fed with 89 mmol l(-1) d(-1) thiosulfate reaching 98 to 100% thiosulfate conversion with an elemental sulfur yield of 77%. Ninety-three percent of the produced sulfur was harvested from the bottom of the reactor as sulfur sludge. The dry sulfur sludge contained 87% elemental sulfur. The inclusion of an internal settler and packing material in the reactor system resulted in an effective retention of sulfur and biomass inside the bioreactor, preventing the oxidation of thiosulfate and elemental sulfur to sulfate in the aerator and, therefore, improving the efficiency of elemental sulfur formation and recovery.