Soil bioaugmentation involves the inoculation of pollutant-degrading bacteria to accelerate pollutant degradation. Often the inoculum shows a dramatic decrease in Colony Forming Units (CFU) upon soil inoculation but this behavior is not well-understood. In this study, the physiology and transcriptomic response of a GFP tagged variant of Novosphingobium sp. LH128 was examined after inoculation into phenanthrene spiked soil. Four hours after inoculation, strain LH128-GFP showed about 99% reduction in CFU while microscopic counts of GFP-expressing cells were identical to the expected initial cell density, indicating that the reduction in CFU number is explained by cells entering into a Viable But Non-Culturable (VBNC)-like state and not by cell death. Transcriptome analysis showed a remarkably higher expression of phenanthrene degradation genes 4 h after inoculation, compared to the inoculum suspension concomitant with an increased expression of genes involved in stress response. This indicates that the cells were active in phenanthrene degradation while experiencing stress. Between 4 h and 10 days, CFU numbers increased to numbers comparable to the inoculated cell density. Our results suggest that strain LH128-GFP enters a VBNC-like state upon inoculation into soil but is metabolically active and that VBNC cells should be taken into account in evaluating bioaugmentation approaches.