Crude soluble extracts of Methylococcus capsulatus strain Bath, grown on methane, were found to contain NAD(P)+-linked formaldehyde dehydrogenase activity. Activity in the extract was lost on dialysis against phosphate buffer, but could be restored by supplementing with inactive, heat-treated extract (70 "C for 12 min). The non-dialysable, heat-sensitive component was isolated and purified, and has a molecular weight of about 115000. Sodium dodecyl sulphate gel electrophoresis of the protein suggested there were two equal subunits with molecular weights of 57000. The heat-stable fraction, which was necessary for activity of the heat-sensitive protein, was trypsin-sensitive and presumed to be a low molecular weight protein or peptide. A number of thiol compounds and other common cofactors could not replace the component present in the heat-treated soluble extract. The purified formaldehyde dehydrogenase oxidized three other aldehydes with the following K, values : 0.68 mM (formaldehyde); 0.075 mM (glyoxal); 7.0 mM (glycolaldehyde); and 2.0 mM (DLglyceraldehyde). NADf or NADPf was required for activity, with K, values of 0.063 and 0.155 mM respectively, and could not be replaced by any of the artificial electron acceptors tested. The enzyme was heat-stable at 45 "C for at least 10 min and had temperature and pH optima of 45 "C and pH 7.2 respectively. A number of metal-binding agents and substrate analogues were not inhibitory. Thiol reagents gave varying degrees of inhibition, the most potent being p-hydroxymercuribenzoate which at 1 mM gave 100% inhibition. The importance of possessing an NAD(P)+-linked formaldehyde dehydrogenase, with respect to M. capsulatus, is discussed.