Main objective of present work was to isolate polyhydroxyalkanoate (PHA) from cell lysate of Bacillus flexus by aqueousaqueous two-phase system (ATPS). Selected ATPS having polyethylene glycol (12%, w/v) and potassium phosphate (9.7%, pH 8.0) containing cell lysate obtained by sonication or hypochlorite treatment of B. flexus biomass (1 g%, dry weight), was held at $28^{circ}C$ for 30 min, which partitioned PHA into top PEG phase and residual cell materials into bottom phase. For enzymatic cell hydrolysis, Microbispora sp. culture filtrate having protease (3 U/mL) was mixed with B. flexus biomass and ATPS, incubated at $37^{circ}C$ for 2 h prior to phase separation. PHA recovered by centrifugation was 19~51% of cell dry weight, depending on the mode of cell disruption. Protease was recovered along with PHA in the PEG phase and showed 7 fold increase in activity. PHA was characterized by GC, FTIR, and $^1H$ NMR. Results indicated that ATPS can be used for the isolation of PHA from hydrolyzed bacterial cells and purified protease can be recovered as a byproduct, in a single defined experiment. Results have indicated that ATPS can be successfully employed as a nonorganic solvent method for the isolation of PHA.