Two types of alcohol dehydrogenase in separate protein families are the "medium-chain" zinc enzymes (including the classical liver and yeast forms) and the "short-chain" enzymes (including the insect form). Although the medium-chain family has been characterized in prokaryotes and many eukaryotes (fungi, plants, cephalopods, and vertebrates), insects have seemed to possess only the short-chain enzyme. We have now also characterized a medium-chain alcohol dehydrogenase in Drosophila. The enzyme is identical to insect octanol dehydrogenase. It is a typical class III alcohol dehydrogenase, similar to the corresponding human form (70% residue identity), with mostly the same residues involved in substrate and coenzyme interactions. Changes that do occur are conservative, but Phe-51 is of functional interest in relation to decreased coenzyme binding and increased overall activity. Extra residues versus the human enzyme near position 250 affect the coenzyme-binding domain. Enzymatic properties are similar--i.e., very low activity toward ethanol (Km beyond measurement) and high selectivity for formaldehyde/glutathione (S-hydroxymethylglutathione; kcat/Km = 160,000 min-1.mM-1). Between the present class III and the ethanol-active class I enzymes, however, patterns of variability differ greatly, highlighting fundamentally separate molecular properties of these two alcohol dehydrogenases, with class III resembling enzymes in general and class I showing high variation. The gene coding for the Drosophila class III enzyme produces an mRNA of about 1.36 kb that is present at all developmental stages of the fly, compatible with the constitutive nature of the vertebrate enzyme. Taken together, the results bridge a previously apparent gap in the distribution of medium-chain alcohol dehydrogenases and establish a strictly conserved class III enzyme, consistent with an important role for this enzyme in cellular metabolism.