In the present study, an efficient mercury-tolerant bacterial strain (RS-5) was isolated from heavy-metalcontaminated industrial effluent. Under shake flask conditions, 97% of the supplemented mercuric chloride was sequestered by the biomass of RS-5 grown in a tryptone soy broth. The sequestered mercuric ions were transformed inside the bacterial cells, as an XRD analysis of the biomass confirmed the formation of mercurous chloride, which is only feasible following the reaction of the elemental mercury and the residual mercuric chloride present within the cells. Besides the sequestration and intracellular transformation, a significant fraction of the mercury (63%) was also volatilized. The 16S rRNA gene sequence of RS-5 revealed its phylogenetic relationship with the family Bacillaceae, and a 98% homology with Lysinibacillus fusiformis, a Gram-positive bacterium with swollen sporangia. This is the first observation of the sequestration and volatilization of mercuric ions by Lysinibacillus sp.