Methanol is a reduced one-carbon (C1) compound. It supports growth of aerobic methylotrophs that gain ATP from reduced redox equivalents by respiratory phosphorylation in their electron transport chains. Notably, linear oxidation of methanol to carbon dioxide may yield three reduced redox equivalents if methanol oxidation is NAD-dependent as, e.g., in Bacillus methanolicus. Methanol has a higher degree of reduction per carbon than glucose (6 vs. 4), and thus, lends itself as an ideal carbon source for microbial production of reduced target compounds. However, C-C bond formation in the RuMP or serine cycle, a prerequisite for production of larger molecules, requires ATP and/or reduced redox equivalents. Moreover, heat dissipation and a high demand for oxygen during catabolic oxidation of methanol may pose challenges for fermentation processes. In this chapter, we summarize metabolic pathways for aerobic methanol utilization, aerobic methylotrophs as industrial production hosts, strain engineering, and methanol bioreactor processes. In addition, we provide technological and market outlooks.