The characteristics of 7 alpha-dehydroxylase, a bile acid-biotransforming enzyme, were determined using dialyzed cell extracts of Eubacterium sp. V.P.I. 12708. 7 alpha-Dehydroxylase was induced by cholic acid in this organism. Induction by cholic acid resulted in the differential synthesis of at least five new polypeptides with molecular weights of 77,000, two at 56,000, 27,000 and 23,500, as determined by both one and two-dimensional sodium dodecyl sulfate polyacrylamide gel electrophoresis. The relative molecular weight of 7 alphs-dehydroxylase activity was estimated by anaerobic Bio-Gel A 1.5 M gel filtration chromatography to be 114,000. NAD+ was the only cofactor to consistently stimulate 7 alpha-dehydroxylase activity in dialyzed cell extracts. The specific activity increased 4- to 6-fold with either cholic or chenodeoxycholic acid as a substrate in the presence of NAD+. NAD+ was also required for the reduction of the delta 6-intermediate to deoxycholic acid. Other pyridine or flavin nucleotides were ineffective cofactors when added alone. Saturation kinetics for NAD+ with cholic or chenodeoxycholic acid as substrates were hyperbolic, and Lineweaver-Burk plots yielded apparent Km values of 0.13 mM and 0.006 mM, respectively. Similar kinetics were obtained with cholic acid giving an apparent Km of 25 microM. The substrate saturation curve for chenodeoxycholic acid 7 alpha-dehydroxylation indicated substrate inhibition at high concentrations of chenodeoxycholic acid (greater than 50 microM). These studies show that 7 alpha-dehydroxylase is an inducible enzyme and requires NAD+ as a cofactor in this bacterium.