Metabolic homeostasis is a central organizing principle of physiology whereby dynamic processes work to maintain a balanced internal state. Highly reactive essential metabolites are ideally maintained at equilibrium to prevent cellular damage. In the facultative methylotrophic bacterium Methylobacterium extorquens PA1, the utilization of one-carbon growth substrates, including methanol, generates formaldehyde as an obligate intermediate. Formaldehyde is highly chemically reactive and capable of damaging various biomolecules, making formaldehyde homeostasis critical during methylotrophic growth. However, homeostatic mechanisms that govern formaldehyde balance, which is readily perturbed upon transitioning to methylotrophic growth substrates, have remained elusive. Here we describe how a formaldehyde-sensing protein EfgA, a formaldehyde-responsive MarR-like regulator TtmR, and lanthanide-mediated methylotrophy together impact formaldehyde balance and one-carbon metabolism more broadly when cells are transitioning to growth on formaldehyde-generating one-carbon sources. We found that cells lacking efgA or ttmR are unable to maintain formaldehyde balance during various carbon source transitions resulting in elevated extracellular formaldehyde concentrations and an extended lag phase. In strains lacking efgA, we showed that inflated intracellular formaldehyde pools were accompanied by decreased cell viability, while the loss of ttmR resulted in the loss of one-carbon metabolites to the extracellular space. Additionally, we found less severe formaldehyde imbalances in the presence of lanthanides, even in the absence of efgA and ttmR. This was partly due to the activation of exaF, a lanthanide-dependent alcohol dehydrogenase that served as an alternative formaldehyde-detoxifying system that lessened the necessity of ttmR for maintaining formaldehyde homeostasis. Overall, our data demonstrated that efgA has a primary role in formaldehyde homeostasis in modulating intracellular formaldehyde pools, while ttmR is secondary, preventing carbon loss to the extracellular space. These results led us to develop a model of formaldehyde homeostasis involving formaldehyde sensing, growth arrest, compartmentalization, and auxiliary detoxification systems. This work deepens our understanding of how physiological factors impact biological formaldehyde homeostasis during transient metabolic imbalances of this universal cellular toxin.