Three alcohol dehydrogenase (ADH) genes have recently been characterized in the yeast Kluyveromyces lactis. We report on a fourth ADH in K. lactis (KADH II: KADH2* gene) which is highly similar to other ADHs in K. lactis and Saccharomyces cerevisiae. KADH II appears to be a cytoplasmic enzyme, and after expression of KADH2 in S. cerevisiae enzyme activity comigrated with a K. lactis ADH present in cells grown in glucose or in ethanol. KADH I was also expressed in S. cerevisiae and it comigrated with a major ADH species expressed under glucose growth conditions in K. lactis. The substrate specificities for KADH I and KADH II were shown to be more similar to that of SADH II than to SADH I. SADH I cannot efficiently utilize long chain alcohols, in contrast to other cytoplasmic yeast ADHs, presumably because of the presence of a methionine (residue 271) in its substrate binding cleft. A comparison of the DNA sequences of ADHs among K. lactis, S. cerevisiae and Schizosaccharomyces pombe suggests that the ancestral yeast species contained one cytoplasmic ADH. After divergence from S. pombe, the ADH in the ancestor to K. lactis and S. cerevisiae was duplicated, and one ADH became localized to the mitochondrion, presumably for the oxidative use of ethanol. Following the speciation of S. cerevisiae and K. lactis, the gene encoding the cytoplasmic ADH in S. cerevisiae duplicated, which resulted in the development of the SADH II protein as the primary oxidative enzyme in place of SADH III. In contrast, the K. lactis mitochondrial ADH duplicated to give rise to the highly expressed KADH3 and KADH4 genes, both of which may still play primary roles in oxidative metabolism. These data suggest that K. lactis and S. cerevisiae use different compartments for their metabolism of ethanol. Our results also indicate that the complex regulatory circuits controlling the glucose-repressible SADH2 in S. cerevisiae are a recent acquisition from regulatory networks used for the control of genes other than SADH2.