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A mutant strain of Pseudomonas putida (LU2201) expressing a novel ethylphenylacetate (EPA) esterase was isolated after mutagenesis of P. putida LU6456. The DNA fragment conferring the EPA+ phenotype was cloned and characterized. It included the structural genes of the 2,3-butanediol catabolic pathway, including acoC, which catalyzes the acetyl transfer step (i.e., dihydrolipoamide acetyltransferase). The acoC gene product from LU2201 was expressed in E. coli and shown to be responsible for the novel EPA-esterase activity. Biochemical characterization revealed that the enzyme still retained the natural dihydrolipoamide acetyltransferase activity. Sequence comparison with the corresponding wild-type gene indicated a single-base pair change leading to a I238V replacement in the respective protein. Biochemical characterization of wild-type AcoC enzyme showed that it too was able to catalyze EPA hydrolysis despite the apparent absence of this activity in cells grown in the presence of EPA. Unlike the wild type, EPA serves as an inducer in the mutant strain. Inverse PCR was used to clone the putative regulator acoR from the aco operon in both wild type and mutant strains. Sequence analyses indicated an S14R exchange in the AcoR from the P. putida mutant. This mutation was located in the N-terminal region responsible for regulatory functions, presumably by interaction with signal molecules. This may account for the ability of EPA to induce expression of acoC only in the mutant strain. Key words: Pseudomonas putida, ethylphenylacetate esterase, acetoin cleaving system, acoC gene, dihydrolipoamide acetyl-transferase, E2 component, acoR gene.