The phytopathogenic basidiomycetc Ustilago maydis produces indole-3-acetic acid (IndCH2COOH) and indole-3-pyruvic acid (Ind-Prv) from tryptophan. Indole-3-acetaldehyde (IndCH2CH2O) is the common intermediate in the conversion of Ind-Prv and tryptamine to IndCH2COOH. We purified an enzyme (Iad1) from U. maydis that catalyzes the NAD(+)-dependent conversion of IndCH2CH2O to IndCH2COOH and isolated corresponding cDNA and genomic clones. The identity of the cDNA clone was confirmed by expression in Escherichia coli and demonstration of enzymatic activity. In U. maydis, iad1-null mutants were generated by gene replacement. The ability to convert IndCH2CH2O to IndCH2COOH was at least 100-fold reduced in U. maydis iad1-null mutants grown in medium with glucose as carbon source. However, the iad1-null mutants were not diminished in their capacity to produce IndCH2COOH from tryptophan, indicating that IndCH2COOH formation from tryptophan apparently proceeds in the absence of IndCH2CH2O dehydrogenase activity under these conditions. Iad1 expression was strongly induced during growth on ethanol while under these conditions iad1-null mutants were unable to grow. This reveals that iad1 is primarily engaged in the conversion of ethanol to acetate. In iad1-null mutants we detected an additional NAD(+)-dependent IndCH2CH2O dehydrogenase activity that was induced during growth on L-arabinose but repressed in the presence of D-glucose. In arabinose-containing medium the conversion of tryptophan to IndCH2COOH was approximately 5-fold reduced in wild-type strains but 10-15-fold reduced in iad1-null mutant strains compared to IndCH2COOH formation in glucose-containing medium. In addition, the formation of Ind-Prv from tryptophan was abolished in wild-type and iad1-null mutant strains. During growth on arabinose, the conversion of tryptamine to IndCH2COOH was strongly favored suggesting that the glucose-repressible IndCH2CH2O dehydrogenase is required to convert IndCH2CH2O derived from tryptamine to IndCH2COOH.