A study was undertaken to investigate the distribution of biosurfactant producing and crude oil degrading bacteria in the oil contaminated environment. This research revealed that hydrocarbon contaminated sites are the potent sources for oil degraders. Among 32 oil degrading bacteria isolated from ten different oil contaminated sites of gasoline and diesel fuel stations, 80% exhibited biosurfactant production. The quantity and emulsification activity of the biosurfactants varied. Pseudomonas sp. DS10-129 produced a maximum of 7.5 ± 0.4 g/l of biosurfactant with a corresponding reduction in surface tension from 68 mN/m to 29.4 ± 0.7 mN/m at 84 h incubation. The isolates Micrococcus sp. GS2-22, Bacillus sp. DS6-86, Corynebacterium sp. GS5-66, Flavobacterium sp. DS5-73, Pseudomonas sp. DS10-129, Pseudomonas sp. DS9-119 and Acinetobacter sp. DS5-74 emulsified xylene, benzene, n-hexane, Bombay High crude oil, kerosene, gasoline, diesel fuel and olive oil. The first five of the above isolates had the highest emulsification activity and crude oil degradation ability and were selected for the preparation of a mixed bacterial consortium, which was also an efficient biosurfactant producing oil emulsifying and degrading culture. During this study, biosurfactant production and emulsification activity were detected in Moraxella sp., Flavobacterium sp. and in a mixed bacterial consortium, which have not been reported before.