Microbe-mediated arsenic (As) redox reactions play an important role in the biogeochemical cycling of As. Reduction of arsenate [As(V)] generally leads to As mobilization in paddy soils and increased As availability to rice plants, whereas oxidation of arsenite [As(III)] results in As immobilization. A novel chemoautotrophic As(III)-oxidizing bacterium, designated strain SY, was isolated from an As-contaminated paddy soil. The isolate was able to derive energy from the oxidation of As(III) to As(V) under both aerobic and anaerobic conditions using O2 or NO3(-) as the respective electron acceptor. Inoculation of the washed SY cells into a flooded soil greatly enhanced As(III) oxidation to As(V) both in the solution and adsorbed phases of the soil. Strain SY is phylogenetically closely related to Paracoccus niistensis with a 16S rRNA gene similarity of 96.79%. The isolate contains both the denitrification and ribulose 1,5-bisphosphate carboxylase/oxygenase gene clusters, underscoring its ability to denitrify and to fix CO2 while coupled to As(III) oxidation. Deletion of the aioA gene encoding the As(III) oxidase subunit A abolished the As(III) oxidation ability of strain SY and led to increased sensitivity to As(III), suggesting that As(III) oxidation is a detoxification mechanism in this bacterium under aerobic and heterotrophic growth conditions. Analysis of the aioA gene clone library revealed that the majority of the As(III)-oxidizing bacteria in the soil were closely related to the genera Paracoccus of α-Proteobacteria. Our results provide direct evidence for As(III) oxidation by Paracoccus species and suggest that these species may play an important role in As(III) oxidation in paddy soils under both aerobic and denitrifying conditions.