Sulfonamide antibiotics have a wide application range in human and veterinary medicine. Because they tend to persist in the environment, they pose potential problems with regard to the propagation of antibiotic resistance. Here, we identified metabolites formed during the degradation of sulfamethoxazole and other sulfonamides in Microbacterium sp. strain BR1. Our experiments showed that the degradation proceeded along an unusual pathway initiated by ipso-hydroxylation with subsequent fragmentation of the parent compound. The NADH-dependent hydroxylation of the carbon atom attached to the sulfonyl group resulted in the release of sulfite, 3-amino-5-methylisoxazole, and benzoquinone-imine. The latter was concomitantly transformed to 4-aminophenol. Sulfadiazine, sulfamethizole, sulfamethazine, sulfadimethoxine, 4-amino-N-phenylbenzenesulfonamide, and N-(4-aminophenyl)sulfonylcarbamic acid methyl ester (asulam) were transformed accordingly. Therefore, ipso-hydroxylation with subsequent fragmentation must be considered the underlying mechanism; this could also occur in the same or in a similar way in other studies, where biotransformation of sulfonamides bearing an amino group in the para-position to the sulfonyl substituent was observed to yield products corresponding to the stable metabolites observed by us.