Bacterial degradation of sulfoacetate, a widespread natural product, proceeds via sulfoacetaldehyde and requires a considerable initial energy input. Whereas the fate of sulfoacetaldehyde in Cupriavidus necator (Ralstonia eutropha) H16 is known, the pathway from sulfoacetate to sulfoacetaldehyde is not. The genome sequence of the organism enabled us to hypothesize that the inducible pathway, which initiates sau (sulfoacetate utilization), involved a four-gene cluster (sauRSTU; H16_A2746 to H16_A2749). The sauR gene, divergently orientated to the other three genes, probably encodes the transcriptional regulator of the presumed sauSTU operon, which is subject to inducible transcription. SauU was tentatively identified as a transporter of the major facilitator superfamily, and SauT was deduced to be a sulfoacetate-CoA ligase. SauT was a labile protein, but it could be separated and shown to generate AMP and an unknown, labile CoA-derivative from sulfoacetate, CoA, and ATP. This unknown compound, analyzed by MALDI-TOF-MS, had a relative molecular mass of 889.7, which identified it as protonated sulfoacetyl-CoA (calculated 889.6). SauS was deduced to be sulfoacetaldehyde dehydrogenase (acylating). The enzyme was purified 175-fold to homogeneity and characterized. Peptide mass fingerprinting confirmed the sauS locus (H16_A2747). SauS converted sulfoacetyl-CoA and NADPH to sulfoacetaldehyde, CoA, and NADP(+), thus confirming the hypothesis.