Anaerobic membrane bioreactor (AnMBR) is a promising technology to treat phenolic wastewater. Conductive materials such as magnetite and granular activated carbon have been reported to be capable of improving anaerobic digestion by facilitating direct interspecies electron transfer (DIET). This research first investigated the effect of magnetite on the treatment of synthetic p-cresol (a relative abundant compound in phenolic wastewater) wastewater in a lab-scale AnMBR. Magnetite increased the reactor stability, permitted higher p-cresol loading rate in the AnMBR, and reduced the fouling potential of supernatant of the mixed liquor. Activities of dehydrogenase and F420 were significantly increased and this may have contributed to the enhanced reactor performance. Magnetite supplement did not have a substantial influence on the soluble microbial products (SMPs) concentration compared to the stage without magnetite whereas extracellular polymeric substances (EPS) concentration significantly increased with magnetite supplement. Reduced fouling potential of the supernatant of the mixed liquor may be attributed to the decrease of protein content in SMPs in the stage with magnetite supplement. Second, the effect of magnetite on the methanogenic degradation pathway of p-cresol was studied, in which the rate limiting step was the conversion of intermediate compound benzoate. Moreover, magnetite increased the maximum substrate degradation rate of all the chosen intermediates as well as the accumulative methane production. Batch test using inoculum adapted to magnetite failed to yield faster substrate degradation rate in comparison with the batch test using non-adapted inoculum. This may be ascribed to the loss of biomass when magnetite was removed from the collected sludge because magnetite and DIET-based microorganisms were closely associated and shaking manually was not sufficient for microorganisms to detach from the magnetite. Since magnetite nanoparticles enhanced reactor performance and stability as well as reduced fouling potential of the supernatant of the mixed liquor, potential commercial application of magnetite nanoparticles in AnMBR may permit shorter hydraulic retention time (HRT) and higher flux, which can lead to higher treatment capacity and lower operational costs. Further research should investigate the effect of potential magnetite corrosion on the reactor performance, the effect of magnetite on fouling potential of the mixed liquor, and likely loss of biomass in case of magnetite removal and methods to remove magnetite with as little loss of biomass as possible.