The gene coding for d-3-hydroxybutyrate dehydrogenase (HBDH) was cloned from Pseudomonas fragi. The nucleotide sequence contained a 780 bp open reading frame encoding a 260 amino acid residue protein. The recombinant enzyme was efficiently expressed in Escherichia coli cells harboring pHBDH11 and was purified to homogeneity as judged by SDS-PAGE. The enzyme showed a strict stereospecificity to the D-enantiomer (3R-configuration) of 3-hydroxybutyrate as a substrate. Crystals of the ligand-free HBDH and of the enzyme-NAD+ complex were obtained using the hanging-drop, vapor-diffusion method. The crystal structure of the HBDH was solved by the multiwavelength anomalous diffraction method using the SeMet-substituted enzyme and was refined to 2.0 A resolution. The overall structure of P.fragi HBDH, including the catalytic tetrad of Asn114, Ser142, Tyr155, and Lys159, shows obvious relationships with other members of the short-chain dehydrogenase/reductase (SDR) family. A cacodylate anion was observed in both the ligand-free enzyme and the enzyme-NAD+ complex, and was located near the catalytic tetrad. It was shown that the cacodylate inhibited the NAD+-dependent D-3-hydroxybutyrate dehydrogenation competitively, with a Ki value of 5.6 mM. From the interactions between cacodylate and the enzyme, it is predicted that substrate specificity is achieved through the recognition of the 3-methyl and carboxyl groups of the substrate.