In this study, biological conversion of methane to methanol was investigated as a simple and economic method for production of the valuable product. Firstly, two methanotrophs capable of methane consumption were isolated from anaerobic digester sludge. Then, the effect of parameters of type of methanotroph isolate (R1, R2), nitrogen source (nitrate, ammonium), inlet ratio of methane to air (50:50, 70:30), temperature (28ºC, 32ºC) and cultivation time (10hr, 22hr) on cell growth and methanol production was examined in a lab-scale with gentle agitation approximately 200rpm using 25 factorial method. Flasks (500ml) containing 200ml of medium equipped with the gas inlet and outlet valves were gassed once a day, and the determination of the cell growth and methanol bioproduction were carried out using a spectrophotometer at 600nm and gas chromatograph, respectively. The obtained results and their statistic analysis showed that temperature (P=0.0001), nitrogen source (P=0.0001) and temperature-strain interaction (P=0.0073) had significant effect on the methanol production. Maximum methanol production was observed about 754ppm with the R1 bacteria at 28ºC and nitrate as the nitrogen source, which was comparable with the values reported (approximately 1gr/lit) in few studies performed concerning this subject in the literature. The results showed that, maximum amount of methanol production was achieved in the initial period of growth phase (10h), and afterward with increasing cell growth rates, a reduction in the methanol concentration was observed. This decrease in the methanol concentration which was accompanied with a reduction in the pH value of medium can be due to the consumption of methanol by bacteria as a carbon source in the growth phase. nitrogen source (nitrate) concentration with a colorimetric method using the kits manufactored MN Co. in spectophotometry 229nm wavelengths was determined. complementary experiments using the effective parameters and 23 factorial method with twice repeat in a 2.5 liters bioreactor containing 1lit of medium equipped continuous gas input and output channel with 50:50 ratio of methane to air and 100cm3/min of flow rate was investigated. cell growth and methanol bioproduction were carried out using a spectrophotometer at 600nm and gas chromatograph, respectively. Maximum methanol production observed was about 902ppm with the R1 bacteria at 28ºC and nitrate as the nitrogen source. Results of this work indicates that the biological production of methanol from methane because of simple process conditions can be considered as an economic option in comparison with the conventional chemical production of methanol.