Ethanol is a common substrate for anaerobic microorganisms despite its high redox potential (Symboletha- nol/acetaldehyde = −190mV), which does not allow for NAD+ reduction. How this thermodynamic barrier is overcome is largely unknown. The acetogenic bacteriumAcetobacterium woodii canalso grow on ethanol. The genome harbours 11 genes encoding putative alcohol dehydrogenases, but only one,adhE, was upregulated during growth on ethanol. The bifunctional acetaldehyde/ethanol dehydrogenase (AdhE) was purified from ethanol-grown cells. It catalysed the NAD+- and CoA-dependent oxidation of ethanol via acetaldehyde to acetyl-CoA. The enzyme was regulated by free coenzyme A: in the absence of coenzyme A, theKm value for ethanol was shifted from 3.4 to 40 mM. The alcohol dehydrogenase domain could also oxidize 1-propanol and 1-butanol; however, the aldehyde dehydrogenase domain was highly specific for acetaldehyde as substrate. Apparently, the bifunctional AdhE allows for NAD+ reduction by lowering the concentration of acetaldehyde, which makes the first oxidation reaction thermodynamically feasible.