Human gene for pancreas protein 2 (PAN2) is a novel member of the short-chain dehydrogenase/reductase gene superfamily. The properties of PAN2 protein have not yet been characterized. We present the first evidence that human PAN2 is a ubiquitously expressed microsomal enzyme that recognizes retinoids but not steroids as substrates with the apparent K(m) values between 0.08 microM and 0.4 microM. PAN2 is approximately 4-fold more efficient in the reductive than in the oxidative direction. The apparent K(m) values for NADP(+) and NADPH are 0.65 microM and 0.32 microM versus 1200 microM and 1060 microM for NAD(+) and NADH, respectively. Kinetic constants and expression pattern of PAN2 suggest that it is likely to function as a reductase in vivo and might contribute to the reduction of retinaldehyde to retinol in most human tissues.