A Bacillus species that produces 2,3-butanediol (2,3-BD), termed BRC1, was newly isolated, and a 2,3-BD dehydrogenase (Bdh) from this species was identified and characterized at the molecular and biochemical level. Sequence analysis revealed that Bdh is homologous to D-2,3-BD dehydrogenases. An analysis of the enzymatic properties of Bdh overexpressed in Escherichia coli confirmed the molecular results, showing preferred activity toward D-2,3-BD. Optimum pH, temperature, and kinetics determined for reductive and oxidative reactions support the preferential production of 2,3-BD during cell growth. Overexpression of bdh under the control of a xylose-inducible promoter resulted in increased enzyme activity and enhanced 2,3-BD production in Bacillus sp. BRC1. Additionally, a hydrolysate of cellulosic material, (empty palm fruit bunches), was successfully used for the enhanced production of 2,3-BD in the recombinant Bacillus strain.