Identifying the genetic basis for adaptive differences between species requires explicit tests of historical hypotheses concerning the effects of past changes in gene sequence on molecular function, organismal phenotype and fitness. We address this challenge by combining ancestral protein reconstruction with biochemical experiments and physiological analysis of transgenic animals that carry ancestral genes. We tested a widely held hypothesis of molecular adaptation-that changes in the alcohol dehydrogenase protein (ADH) along the lineage leading to Drosophila melanogaster increased the catalytic activity of the enzyme and thereby contributed to the ethanol tolerance and adaptation of the species to its ethanol-rich ecological niche. Our experiments strongly refute the predictions of the adaptive ADH hypothesis and caution against accepting intuitively appealing accounts of historical molecular adaptation that are based on correlative evidence. The experimental strategy we employed can be used to decisively test other adaptive hypotheses and the claims they entail about past biological causality.