Biotransformation of selenite to valuable elemental selenium nanoparticles (Se0) is a promising avenue to remediate seleniferous environments and simultaneously recover selenium (Se). However, the underlying oxyanion competition and selenite transformation mechanism in prokaryotes are poorly understood. In this work, the impacts of phosphate on selenite uptake and transformation were elucidated with Escherichia coli and its mutant deficient in phosphate transport as model microbial strains. Selenite uptake was inhibited by phosphate in E. coli. Moreover, the transformation of internalized Se was shifted from Se0 to toxic organo-Se with elevated phosphate levels, as evidenced by the linear combination fit analysis of the Se K-edge X-ray absorption near-edge structure. Such a phosphate-regulated selenite biotransformation process was mainly assigned to the competitive uptake of phosphate and selenite, which was primarily mediated by a low affinity phosphate transporter (PitA). Under phosphate-deficient conditions, the cells not only produced abundant Se0 nanoparticles but also maintained good cell viability. These findings provide new insights into the phosphate-regulated selenite biotransformation by prokaryotes and contribute to the development of new processes for bioremediating Se-contaminated environments, as well as bioassembly of Se0.