A methanotrophic bacterium, named SAD2, was isolated from a hydrogen sulfide (H2S)-rich anaerobicdigester. Based on its 16S rRNA gene sequence, SAD2 belongs to Methylocaldum sp. SAD2 grew stablyon methane/air mixtures containing 500 and 1000 ppm of H2S, and showed H2S tolerance higher thanthose reported for Methylomicrobium album and Methylocystis sp. Exposure to 1000 ppm or less H2Sduring SAD2 cell preparation did not affect the subsequent methanol production, while the presence of1000 ppm H2S in the methanol production process caused a 44–60% decrease in methanol concentration.When a biogas/air mixture containing about 500 ppm or less H2S was used for methanol production bySAD2, 276–343 mg/L of methanol was obtained with methane-to-methanol conversion efficiencies of30–34%. This new isolate may be used in conversion of biogas to methanol without scrubbing of H2S.