Degradation of 7,8-dihydrofolate (H2folate) in the presence of dihydrofolate reductase (DHFR) has been shown due not to an oxygenase activity of the reductase as previously reported but to dismutation of H2folate to folate and 5,6,7,8-tetrahydrofolate (H4folate). The reaction can be followed spectrophotometrically or by analysis of the reaction mixture by high-performance liquid chromatography (HPLC). The products have also been isolated and characterized. Oxygen uptake during the reaction is much less than stoichiometric with H2folate disappearance and is attributed to autoxidation of the H4folate formed. The dismutation activity is a property of highly purified Streptococcus faecium DHFR isoenzyme 2 (but not isoenzyme 1) and of Lactobacillus casei DHFR, but not of bovine liver DHFR. The activity is dependent on tightly bound NADP+ and/or NADPH. Removal of the nucleotide results in loss of dismutation activity, which is restored by adding NADP+ or NADPH. Maximum activity is obtained when approximately 1 mol equiv of nucleotide is added per mol of DHFR. It is proposed that in the dismutation reaction bound NADP(H) is alternately reduced and oxidized by incoming molecules of H2folate with release of folate and H4folate, respectively. The relatively slow rate of folate formation presumably limits the rate of the overall reaction. The equilibrium constant for the dismutation reaction is 19.4 +/- 7.4 at 22 degrees C and pH 7.0. Calculation of standard oxidation-reduction potentials at pH 7 gave values of -0.230 V for the H2folate/H4 folate pair and -0.268 V for the folate/H2folate pair. The mechanism by which NADP+ is retained by the enzyme from some sources during purification procedures is unclear.(ABSTRACT TRUNCATED AT 250 WORDS)