Beta-cypermethrin is one of the widely used pyrethroid insecticides, and problems associated with the accumulation of its residues have aroused public attention. Thus, there is an urgent need to effectively remove the beta-cypermethrin that is present in the environment. Biodegradation is considered a cost-effective and environmentally friendly method for removing pesticide residues. However, the beta-cypermethrin-degrading microbes that are currently available are not optimal. In this study, Pseudomonas aeruginosa PAO1 was capable of efficiently degrading beta-cypermethrin and its major metabolite 3-phenoxybenzaldehyde in water/soil environments. Strain PAO1 could remove 91.4% of beta-cypermethrin (50 mg/L) in mineral salt medium within 120 h. At the same time, it also possesses a significant ability to metabolize 3-phenoxybenzaldehyde—a toxic intermediate of beta-cypermethrin. The Andrews equation showed that the maximum substrate utilization concentrations of beta-cypermethrin and 3-phenoxybenzaldehyde by PAO1 were 65.3558 and 49.6808 mg/L, respectively. Box–Behnken design-based response surface methodology revealed optimum conditions for the PAO1 strain-based degradation of beta-cypermethrin as temperature 30.6 °C, pH 7.7, and 0.2 g/L inoculum size. The results of soil remediation experiments showed that indigenous micro-organisms helped to promote the biodegradation of beta-cypermethrin in soil, and beta-cypermethrin half-life in non-sterilized soil was 6.84 days. The bacterium transformed beta-cypermethrin to produce five possible metabolites, including 3-phenoxybenzyl alcohol, methyl 2-(4-hydroxyphenoxy)benzoate, diisobutyl phthalate, 3,5-dimethoxyphenol, and 2,2-dimethyl-1-(4-phenoxyphenyl)propanone. Among them, methyl 2-(4-hydroxyphenoxy)benzoate and 3,5-dimethoxyphenol were first identified as the intermediate products during the beta-cypermethrin degradation. In addition, we propose a degradation pathway for beta-cypermethrin that is metabolized by strain PAO1. Beta-cypermethrin could be biotransformed firstly by hydrolysis of its carboxylester linkage, followed by cleavage of the diaryl bond and subsequent metabolism. Based on the above results, P. aeruginosa PAO1 could be a potent candidate for the beta-cypermethrin-contaminated environmental bioremediation.