There is great interest in developing synthetic methylotrophs that harbor methane and methanol utilization pathways in heterologous hosts such as Escherichia coli for industrial bioconversion of one-carbon compounds. While there are recent reports that describe the successful engineering of synthetic methylotrophs, additional efforts are required to achieve the robust methylotrophic phenotypes required for industrial realization. Here, we address an important issue of synthetic methylotrophy in E. coli: methanol toxicity. Both methanol, and its oxidation product, formaldehyde, are cytotoxic to cells. Methanol alters the fluidity and biological properties of cellular membranes while formaldehyde reacts readily with proteins and nucleic acids. Thus, efforts to enhance the methanol tolerance of synthetic methylotrophs are important. Here, adaptive laboratory evolution was performed to improve the methanol tolerance of several E. coli strains, both methylotrophic and non-methylotrophic. Serial batch passaging in rich medium containing toxic methanol concentrations yielded clones exhibiting improved methanol tolerance. In several cases, these evolved clones exhibited a > 50% improvement in growth rate and biomass yield in the presence of high methanol concentrations compared to the respective parental strains. Importantly, one evolved clone exhibited a two to threefold improvement in the methanol utilization phenotype, as determined via 13C-labeling, at non-toxic, industrially relevant methanol concentrations compared to the respective parental strain. Whole genome sequencing was performed to identify causative mutations contributing to methanol tolerance. Common mutations were identified in 30S ribosomal subunit proteins, which increased translational accuracy and provided insight into a novel methanol tolerance mechanism. This study addresses an important issue of synthetic methylotrophy in E. coli and provides insight as to how methanol toxicity can be alleviated via enhancing methanol tolerance. Coupled improvement of methanol tolerance and synthetic methanol utilization is an important advancement for the field of synthetic methylotrophy.