The formation of sulfolane by-products (e.g., sulfate) is often a consequence of biological treatment because sulfates in groundwater are converted to toxic hydrogen sulfide if there is little dissolved oxygen. This study inoculates sulfolane-degrading bacteria (Pseudomonas sp. YATO411) and sulfate-reducing bacteria (Shewanella) in a laboratory-scale microbial fuel cell (MFC) to determine the electrochemical activity and changes in the microbial community, to increase the removal of sulfolane and by-products from contaminated groundwater. The toxicity of groundwater that is treated using a MFC is determined using the intensity of the bioluminescence from toxicity-sensitive Vibrio fischeri. The respective sulfolane removal rates for sulfolane-degrading bacteria are 10 mg/L/day, 11 mg/L/day and 7.5 mg/L/day for sulfolane concentrations of 50 mg/L, 100 mg/L and 200 mg/L. However, a MFC that uses Shewanella has a respective sulfolane removal rate of 16.67 mg/L/day, 12.5 mg/L/day and 12.5 mg/L/day. The concentration of sulfate decreases and the output voltage increases (1.18–1.65 times) if Shewanella is used for the MFC system. A biotoxicity assessment shows that inhibition of the luminescence of Vibrio fischeri in synthetic groundwater using a sulfolane concentration of 200 mg/L that is treated using a MFC decreases significantly from 93.72 % to 8.28 % after 15 min of exposure, which is similar to the background value of 6.3 % (natural death of the Vibrio fischeri). This shows that the MFC and a process of bioaugmentation reduce toxicity.