The marine bioluminescent bacterium Photobacterium phosphoreum expresses a bifunctional methylenetetrahydrofolate dehydrogenase-cyclohydrolase with dual cofactor specificity. An investigation of the kinetic parameters of the P. phosphoreum enzyme indicate that its utilization of dinucleotide cofactors shares similarities with the human mitochondrial dehydrogenase-cyclohydrolase. Both enzymes exhibit dual cofactor specificity and the NAD(+)-dependent dehydrogenase activities from both enzymes can be activated by inorganic phosphate. Furthermore, an analysis of multiply aligned dehydrogenase-cyclohydrolase sequences from 11 species revealed that bacterial and mitochondrial enzymes are more closely related to each other than to the dehydrogenase-cyclohydrolase domains from eukaryotic trifunctional enzymes, and that the bacterial and mitochondrial enzymes share a common point of divergence. Since the NADP+ cofactor is kinetically favoured by a factor of 18 over NAD+, and is therefore likely to be the preferred in vivo cofactor, we propose that the P. phosphoreum enzyme and the human mitochondrial enzyme evolved from a common ancestral dehydrogenase-cyclohydrolase with dual cofactor specificity, but that cofactor preference in these two enzymes diverged in response to different metabolic requirements.