Blue light plays an important role in developmental control throughout nature. The bli-4 gene of Neurospora crassa, together with bli-3, al-1 and al-2, is rapidly inducible by blue light. Induction leads to a ninety-fold increase in transcription rate over the dark control level, and the gene therefore appears to be of prime importance in the blue-light induction pathway of N. crassa. We describe the sequencing and analysis of bli-4 and the 38 kDa protein it encodes. We show that the protein is very rapidly imported into the mitochondria and exhibits high homology with the family of short-chain alcohol dehydrogenases.