Clinally varying traits in Drosophila melanogaster provide good opportunities for elucidating the genetic basis of adaptation. Resistance to ethanol, a natural component of D. melanogaster's breeding sites, increases with latitude on multiple continents, indicating that the trait is under selection. Although the well-studied Alcohol dehydrogenase (Adh) polymorphism makes a contribution to the clines, it accounts for only a small proportion of the phenotypic variation. We describe an amino acid replacement polymorphism in Aldehyde dehydrogenase (Aldh), the gene encoding the second enzyme in the ethanol degradation pathway, that shows hallmarks of also contributing to the clines. The derived Aldh allele, like the Adh-Fast allele, increases in frequency in laboratory populations selected for ethanol resistance, and increases in frequency with latitude in wild populations. Moreover, strains with the derived allele have significantly higher ALDH enzyme activity with acetaldehyde (the breakdown product of ethanol) as a substrate than strains with the ancestral allele. As is the case with the Adh-Fast allele, chromosomes with the derived Aldh allele show markedly reduced molecular variation in the vicinity of the replacement polymorphism compared to those with the ancestral allele, suggesting a single, relatively recent origin. Nonetheless, the Aldh polymorphism differs from the Adh polymorphism in that the ethanol-associated allele remains in relatively low frequency in most populations. We present evidence that this is likely to be the result of a trade-off in catalytic activity, with the advantage of the derived allele in acetaldehyde detoxification being offset by a disadvantage in detoxification of other aldehydes.