A halotolerant yeast strain of Candida sp. was purified for phenol biodegradation and was immobilized in alginate and nano-SiO2. The concentration of nanoscale SiO2 was optimized and phenol degradation performance with different initial phenol concentrations was evaluated. Three common kinetic models were used to correlate the experimental data. The effects of pH and salinity on phenol biodegradation were also investigated. It was found that 1.0% (w/v) was the optimal nano-SiO2 concentration and the immobilized cells had a better phenol removal performance compared to free cells. More than 99% of 600 mg l−1 phenol was removed by the immobilized strains within 48 h. The immobilized cells also showed highest phenol degradation rates when pH and salinity were 6.5 and 0%, respectively. The high removal efficiency of phenol in reusability tests indicated the promising application of the immobilized Candida strain in phenol degradation under hypersaline conditions over a long period.