The β-hydroxyacid dehydrogenases form a large family of ubiquitous enzymes that catalyze oxidation of various β-hydroxy acid substrates to corresponding semialdehydes. Several known enzymes include β-hydroxyisobutyrate dehydrogenase, 6-phosphogluconate dehydrogenase, 2-(hydroxymethyl)glutarate dehydrogenase, and phenylserine dehydrogenase, but the vast majority of β-hydroxyacid dehydrogenases remain uncharacterized. Here, we demonstrate that the predicted β-hydroxyisobutyrate dehydrogenase PA0743 from Pseudomonas aeruginosa catalyzes an NAD(+)-dependent oxidation of l-serine and methyl-l-serine but exhibits low activity against β-hydroxyisobutyrate. Two crystal structures of PA0743 were solved at 2.2-2.3-Å resolution and revealed an N-terminal Rossmann fold domain connected by a long α-helix to the C-terminal all-α domain. The PA0743 apostructure showed the presence of additional density modeled as HEPES bound in the interdomain cleft close to the predicted catalytic Lys-171, revealing the molecular details of the PA0743 substrate-binding site. The structure of the PA0743-NAD(+) complex demonstrated that the opposite side of the enzyme active site accommodates the cofactor, which is also bound near Lys-171. Site-directed mutagenesis of PA0743 emphasized the critical role of four amino acid residues in catalysis including the primary catalytic residue Lys-171. Our results provide further insight into the molecular mechanisms of substrate selectivity and activity of β-hydroxyacid dehydrogenases.