Halohydrin dehalogenases, also known as haloalcohol dehalogenases or halohydrin hydrogen-halide lyases, catalyze the nucleophilic displacement of a halogen by a vicinal hydroxyl function in halohydrins to yield epoxides. Three novel bacterial genes encoding halohydrin dehalogenases were cloned and expressed in Escherichia coli, and the enzymes were shown to display remarkable differences in substrate specificity. The halohydrin dehalogenase of Agrobacterium radiobacter strain AD1, designated HheC, was purified to homogeneity. The k_cat and K_m values of this 28-kDa protein with 1,3-dichloro-2-propanol were 37 s¹ and 0.010 mM, respectively. A sequence homology search as well as secondary and tertiary structure predictions indicated that the halohydrin dehalogenases are structurally similar to proteins belonging to the family of short-chain dehydrogenases/reductases (SDRs). Moreover, catalytically important serine and tyrosine residues that are highly conserved in the SDR family are also present in HheC and other halohydrin dehalogenases. The third essential catalytic residue in the SDR family, a lysine, is replaced by an arginine in halohydrin dehalogenases. A site-directed mutagenesis study, with HheC as a model enzyme, supports a mechanism for halohydrin dehalogenases in which the conserved Tyr145 acts as a catalytic base and Ser132 is involved in substrate binding. The primary role of Arg149 may be lowering of the pK_a of Tyr145, which abstracts a proton from the substrate hydroxyl group to increase its nucleophilicity for displacement of the neighboring halide. The proposed mechanism is fundamentally different from that of the well-studied hydrolytic dehalogenases, since it does not involve a covalent enzyme-substrate intermediate.