Oxidation of fatty alcohols to acids in gourami caeca was investigated by measuring the reduction of NAD+ and the formation of labeled hexadecanoic acid from [1(-14)C]hexadecanol. Virtually all dehydrogenase activity is in the microsomal fraction. Maximal activity is obtained with NAD+ as cofactor whereas with NADP+ 60% of that activity is obtained. The enzyme is rather specific for long chain alcohols and 2 NADH are formed for each molecule of hexadecanol oxidized to acid. It is stabilized by mercaptoethanol, and completely inhibited by p-chloromercuribenzoate. The activity is optimal at pH 9.5. At higher pH, small amounts of aldehyde are found. The first reaction in the sequence, fatty alcohol leads to aldehyde leads to acid seems to occur under the more physiological condition at a much slower rate than the second reaction so that free aldehyde is not detected. Addition of palmitic acid indicated an uncompetitive product inhibition. The oxidation of alcohol to acid is reversible only to a very minor extent even in the presence of NADPH, CoA, ATP and Mg2+. Location, activity and properties of the enzyme are in agreement with the earlier observation from dietary experiments that in the gourami fatty alcohols of wax esters are oxidized to acids in the course of absorption.