D-beta-Hydroxybutyrate dehydrogenase (BDH), a lipid-requiring enzyme, has been cloned into pUC18, expressed in Escherichia coli, and purified to homogeneity. The apoenzyme, i.e., the enzyme devoid of phospholipid, has no activity, but can be activated by phospholipid to a specific activity of 129 mumol/(min.mg). The functional properties of the enzyme expressed in E. coli were compared with the enzyme purified from rat liver. The specific activities, kinetic parameters, and phospholipid activation profiles were virtually identical. These results indicate that the expression of the enzyme in E. coli is a viable method for producing active functional BDH and should allow for the production of specifically altered BDH molecules.