Formaldehyde, a major industrial chemical, is classified as a carcinogen because of its high reactivity with DNA. It is inactivated by oxidative metabolism to formate in humans by glutathione-dependent formaldehyde dehydrogenase. This NAD(+)-dependent enzyme belongs to the family of zinc-dependent alcohol dehydrogenases with 40 kDa subunits and is also called ADH3 or chi-ADH. The first step in the reaction involves the nonenzymatic formation of the S-(hydroxymethyl)glutathione adduct from formaldehyde and glutathione. When formaldehyde concentrations exceed that of glutathione, nonoxidizable adducts can be formed in vitro. The S-(hydroxymethyl)glutathione adduct will be predominant in vivo, since circulating glutathione concentrations are reported to be 50 times that of formaldehyde in humans. Initial velocity, product inhibition, dead-end inhibition, and equilibrium binding studies indicate that the catalytic mechanism for oxidation of S-(hydroxymethyl)glutathione and 12-hydroxydodecanoic acid (12-HDDA) with NAD(+) is random bi-bi. Formation of an E.NADH.12-HDDA abortive complex was evident from equilibrium binding studies, but no substrate inhibition was seen with 12-HDDA. 12-Oxododecanoic acid (12-ODDA) exhibited substrate inhibition, which is consistent with a preferred pathway for substrate addition in the reductive reaction and formation of an abortive E.NAD(+).12-ODDA complex. The random mechanism is consistent with the published three-dimensional structure of the formaldehyde dehydrogenase.NAD(+) complex, which exhibits a unique semi-open coenzyme-catalytic domain conformation where substrates can bind or dissociate in any order.