Cultures of methane- or methanol-utilizing microbes, including obligate (both types I and II) and facultative methylotrophic bacteria, obligate methanol utilizers, and methanol-grown yeasts were isolated from lake water of Warinanco Park, Linden, N.J., and lake and soil samples of Bayway Refinery, Linden, N.J. Resting-cell suspensions of these, and of other known C1-utilizing microbes, oxidized secondary alcohols to their corresponding methyl ketones. The product methyl ketones accumulated extracellularly. Succinate-grown cells of facultative methylotrophs did not oxidize secondary alcohols. Among the secondary alcohols, 2-butanol was oxidized at the highest rate. The optimal conditions for in vivo methyl ketone formation were compared among five different types of C1-utilizing microbes. Some enzymatic degradation of 2-butanone was observed. The product, 2-butanone, did not inhibit the oxidation of 2-butanol. The rate of the 2-butanone production was linear for the first 4 h of incubation for all five cultures tested. A yeast culture had the highest production rate. The optimum temperature for the production of 2-butanone was 35 degrees C for all the bacteria tested. The yeast culture had a higher temperature optimum (40 degrees C), and there was a reasonably high 2-butanone production rate even at 45 degrees C. Metal-chelating agents inhibit the production of 2-butanone, suggesting the involvement of metal(s) in the oxidation of secondary alcohols. Secondary alcohol dehydrogenase activity was found in the cell-free soluble extract of sonically disrupted cells. The cell-free system requires a cofactor, specifically nicotinamide adenine dinucleotide, for its activity. This is the first report of a nicotinamide adenine dinucleotide-dependent, secondary alcohol-specific enzyme.