The molecular basis for the specificity of aldehyde dehydrogenases (ALDHs) for retinal, the precursor of the morphogen retinoic acid, is still poorly understood. We have expressed in Escherichia coli both retinal dehydrogenase (RALDH), a cytosolic aldehyde dehydrogenase originally isolated from rat kidney, and the highly homologous phenobarbital-induced aldehyde dehydrogenase (PB-ALDH). Oxidation of propanal was observed with both enzymes. On the other hand, recombinant RALDH efficiently catalyzed oxidation of 9-cis- and all-trans-retinal, whereas PB-ALDH was inactive with all-trans-retinal and poorly active with 9-cis-retinal. A striking difference between PB-ALDH and all other class I ALDHs is the identity of the amino acid immediately preceding the active nucleophile Cys(302) (Ile(301) instead of Cys(301)). Nevertheless, these amino acids could be exchanged in either RALDH or PB-ALDH without affecting substrate specificity. Characterization of chimeric enzymes demonstrates that distinct groups of amino acids control the differential activity of RALDH and PB-ALDH with all-trans- and 9-cis-retinal. Of 52 divergent amino acids, the first 17 are crucial for activity with all-trans-retinal, whereas the next 25 are important for catalysis of 9-cis-retinal oxidation. Recombinant enzymes with specificity for all-trans- or 9-cis-retinal were obtained, which should provide useful tools to study the relative importance of local production of all-trans- versus 9-cis-retinoic acid in development and tissue differentiation.