NAD-linked, factor-dependent formaldehyde dehydrogenase (FD-FA1DH) of the Gram-positive methylotrophic bacterium, Amycolatopsis methanolica, was purified to homogeneity. It is a trimeric enzyme with identical subunits (molecular mass 40 kDa) containing 6 atoms Zn/enzyme molecule. The factor is a heat-stable, low-molecular-mass compound, which showed retention on an Aminex HPX-87H column. Inactivation of the factor occurred during manipulation, but activity could be restored by incubation with dithiothreitol. The identity of the factor is still unknown. It could not be replaced by thiol compounds or cofactors known to be involved in metabolism of C1 compounds. Of the aldehydes tested, only formaldehyde was a substrate. However, the enzyme showed also activity with higher aliphatic alcohols and the presence of the factor was not required for this reaction. Methanol was not a substrate, but high concentrations of it could replace the factor in the conversion of formaldehyde. Presumably, a hemiacetal of formaldehyde is the genuine substrate, which, in the case of methanol, acts as a factor leading to methylformate as the product. This view is supported by the fact that formate could only be detected in the reaction mixture after acidification. Inhibition studies revealed that the enzyme contains a reactive thiol group, being protected by the binding of NAD against attack by heavy-metal ions and aldehydes. Studies on the effect of the order of addition of coenzyme and substrate suggested that optimal catalysis required NAD as the first binding component. Substrate specificity and the induction pattern clearly indicate a role of the enzyme in formaldehyde oxidation. However, since FD-FA1DH was also found in A. methanolica grown on n-butanol, but not on ethanol, it may have a role in the oxidation of higher aliphatic alcohols as well. FD-FA1DH and the factor from A. methanolica are very similar to a combination already described for Rhodococcus erythropolis [Eggeling, L. & Sahm, H. (1985) Eur. J. Biochem. 150, 129-134]. NAD-linked, glutathione-dependent formaldehyde dehydrogenase (GD-FA1DH) resembles FD-FA1DH in many respects. Since glutathione has so far not been detected in Gram-positive bacteria, FD-FA1DH could be the counterpart of this enzyme in Gram-positive bacteria. Alignment of the N-terminal sequence (31 residues) of FD-FA1DH with that of GD-FA1DH from rat liver indeed showed similarity (30% identical positions). However, comparable similarity was found with class I alcohol dehydrogenase from this organism and with cytosolic alcohol dehydrogenase from Saccharomyces cerevisiae, isozyme 1.(ABSTRACT TRUNCATED AT 400 WORDS)