Expression of the alcohol dehydrogenase gene, adhE, in Escherichia coli is anaerobically regulated at both the transcriptional and the translational levels. To study the AdhE protein, the adhE⁺ structural gene was cloned into expression vectors under the control of the lacZ and trp^c promoters. Wild-type AdhE protein produced under aerobic conditions from these constructs was inactive. Constitutive mutants (adhC) that produced high levels of AdhE under both aerobic and anaerobic conditions were previously isolated. When only the adhE structural gene from one of the adhC mutants was cloned into expression vectors, highly functional AdhE protein was isolated under both aerobic and anaerobic conditions. Sequence analysis revealed that the adhE gene from the adhC mutant contained two mutations resulting in two amino acid substitutions, Ala267Thr and Glu568Lys. Thus, adhC strains contain a promoter mutation and two mutations in the structural gene. The mutant structural gene from adhC strains was designated adhE*. Fragment exchange experiments revealed that the substitution responsible for aerobic expression in the adhE* clones is Glu568Lys. Genetic selection and site-directed mutagenesis experiments showed that virtually any amino acid substitution for Glu568 produced AdhE that was active under both aerobic and anaerobic conditions. These findings suggest that adhE expression is also regulated posttranslationally and that strict regulation of alcohol dehydrogenase activity in E. coli is physiologically significant.