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Crude soluble extracts of Methylococcus capsulatus strain Bath, grown on methane, were found to contain NAD(P)+-linked formaldehyde dehydrogenase activity. Activity in the extract was lost on dialysis against phosphate buffer, but could be restored by supplementing with inactive, heat-treated extract (70 °C for 12 min). The non-dialysable, heat-sensitive component was isolated and purified, and has a molecular weight of about 115000. Sodium dodecyl sulphate gel electrophoresis of the protein suggested there were two equal subunits with molecular weights of 57000. The heat-stable fraction, which was necessary for activity of the heat-sensitive protein, was trypsin-sensitive and presumed to be a low molecular weight protein or peptide. A number of thiol compounds and other common cofactors could not replace the component present in the heat-treated soluble extract. The purified formaldehyde dehydrogenase oxidized three other aldehydes with the following K m values: 0·68 mm (formaldehyde); 0·075 mm (glyoxal); 7·0 mm (glycolaldehyde); and 2·0 mm (dl-glyceraldehyde). NAD+ or NADP+ was required for activity, with K m values of 0.063 and 0.155 mm respectively, and could not be replaced by any of the artificial electron acceptors tested. The enzyme was heat-stable at 45 °C for at least 10 min and had temperature and pH optima of 45 °C and pH 7.2 respectively. A number of metal-binding agents and substrate analogues were not inhibitory. Thiol reagents gave varying degrees of inhibition, the most potent being p-hydroxymercuribenzoate which at 1 mm gave 100 % inhibition. The importance of possessing an NAD(P)+-linked formaldehyde dehydrogenase, with respect to M. capsulatus, is discussed.