Escherichia coli KO11 (parent) and LY01 (mutant) have been engineered for the production of ethanol. Gene arrays were used to identify expression changes that occurred in the mutant, LY01, during directed evolution to improve ethanol tolerance (defined as extent of growth in the presence of added ethanol). Expression levels for 205 (5%) of the ORFs were found to differ significantly (p < 0.10) between KO11 and LY01 under each of six different growth conditions (p < 0.000001). Statistical evaluation of differentially expressed genes according to various classification schemes identified physiological areas of importance. A large fraction of differentially expressed ORFs were globally regulated, leading to the discovery of a nonfunctional fnr gene in strain LY01. In agreement with a putative role for FNR in alcohol tolerance, increasing the copy number of fnr(+) in KO11(pGS196) decreased ethanol tolerance but had no effect on growth in the absence of ethanol. Other differences in gene expression provided additional clues that permitted experimentation. Tolerance appears to involve increased metabolism of glycine (higher expression of gcv genes) and increased production of betaine (higher expression of betIBA and betT encoding betaine synthesis from choline and choline uptake, respectively). Addition of glycine (10 mM) increased ethanol tolerance in KO11 but had no effect in the absence of ethanol. Addition of betaine (10 mM) increased ethanol tolerance by over 2-fold in both LY01 and KO11 but had no effect on growth in the absence of ethanol. Both glycine and betaine can serve as protective osmolytes, and this may be the basis of their beneficial action. In addition, the marAB genes encoding multiple antibiotic resistance proteins were expressed at higher levels in LY01 as compared to KO11. Interestingly, overexpression of marAB in KO11 made this strain more ethanol-sensitive. Overexpression of marAB in LY01 had no effect on ethanol tolerance. Increased expression of genes encoding serine uptake (sdaC) and serine deamination (sdaB) also appear beneficial for LY01. Addition of serine increased the growth of LY01 in the presence and absence of ethanol but had no effect on KO11. Changes in the expression of several genes concerned with the synthesis of the cell envelope components were also noted, which may contribute to increased ethanol tolerance.