Fatty acid ethyl esters are secondary metabolites produced bySaccharomyces cerevisiae and many other fungi. Their natural physiological role is not known but in fermentations of alcoholic beverages and other food products they play a key role as flavor compounds. Information about the metabolic pathways and enzymology of fatty acid ethyl ester biosynthesis, however, is very limited. In this work, we have investigated the role of a three-member S. cerevisiae gene family with moderately divergent sequences (YBR177c/EHT1, YPL095c/EEB1, and YMR210w). We demonstrate that two family members encode an acyl-coenzymeA:ethanol O-acyltransferase, an enzyme required for the synthesis of mediumchain fatty acid ethyl esters. Deletion of either one or both of these genes resulted in severely reduced medium-chain fatty acid ethyl ester production. Purified glutathione S-transferase-tagged Eht1 and Eeb1 proteins both exhibited acyl-coenzymeA:ethanol O-acyltransferase activity in vitro, as well as esterase activity. Overexpression of Eht1 and Eeb1 did not enhance medium-chain fatty acid ethyl ester content, which is probably due to the bifunctional synthesis and hydrolysis activity. Molecular modeling of Eht1 and Eeb1 revealed the presence of a ␣/-hydrolase fold, which is generally present in the substrate-binding site of esterase enzymes. Hence, our results identify Eht1 and Eeb1 as novel acyl-coenzymeA:ethanol O-acyltransferases/esterases, whereas the third family member, Ymr210w, does not seem to play an important role in mediumchain fatty acid ethyl ester formation.The synthesis of fatty acid ethyl esters (FAEEs) 3 is widely distributed in microorganisms, higher plants, and mammals. In mammals, FAEEs are the result of the nonoxidative pathway for the metabolism of ethanol, after ethanol intake (1, 2). In higher plants and microorganisms, FAEEs are formed as secondary metabolites. Because of their strong fruit flavor, ethyl esters of short-and medium-chain fatty acids (MCFAs) constitute a large group of flavor compounds particularly important in the food, beverage, cosmetic, and pharmaceutical industries. The biosynthesis of FAEEs proceeds by two different enzymatic mechanisms, esterification or alcoholysis (3). Esterification is the formation of esters from alcohols and carboxylic acids and is catalyzed by FAEE synthases/carboxylesterases. Alcoholysis is the production of esters from alcohols and acylglycerols or from alcohols and fatty acylCoAs derived from metabolism of fatty acids. Alcoholysis is essentially a transferase reaction in which fatty acyl groups from acylglycerols or acyl-CoA derivatives are directly transferred to alcohols. The formation of FAEEs by alcoholysis is catalyzed by acyl-CoA:ethanol O-acyltransferases (AEATases) (4).Ester biosynthesis is very common in microorganisms, especially in bacteria and yeasts that are used in the fermentation of alcoholic beverages and food products. Information about the metabolic pathways and enzymology of ester biosynthesis in these microorganisms, however, is still v...