3-Methyldiphenylether (MDE) is an important alkyl-substituted diphenyl ether compound that is widely used as an intermediate in the synthesis of pyrethroid insecticides. An efficient MDE-degrading strain QY7-2, identified as Hydrogenophaga atypical, was isolated from activated sludge for the first time. Strain QY7-2 can utilize MDE as the sole carbon and energy source and completely mineralize MDE. The degradation pathway of MDE was proposed in the strain through metabolites identification. A gene cluster involving in methy-oxidation of MDE was cloned from QY7-2 and expressed in Escherichia coli BL21 (DE3), and the products were purified by SDS-PAGE. The specific activities of the recombinant enzymes MdeAB, MdeC and MdeD were 113.8 ± 3.5, 274.5 ± 6.2 and 673.4 ± 8.7 nmol min-1 mg-1, respectively. These results provide the biochemical and genetic foundation of microbial degradation pathway of MDE and benefit the bioremediation of MDE-contaminated environments.