The endophytic bacterium Azoarcus sp. strain BH72 is capable of colonizing the interior of rice roots, where it finds suitable physicochemical properties for multiplying and fixing nitrogen. Because these properties are poorly understood, a microtiter-plate-based screening of a transcriptional gfp (green fluorescent protein) fusion library of Azoarcus sp. grown under different conditions was performed. Monitoring of the GFP activity allowed the identification of a gene highly expressed in medium supplemented with ethanol. Sequence analysis revealed that this gene encodes a pyrrolo-quinoline quinone-dependent alcohol dehydrogenase (ADH). Inspection of the complete genome sequence of the Azoarcus sp. strain BH72 identified seven additional genes encoding putative ADH, indicating that BH72 is well equipped to survive in different environmental conditions offering various alcohols as carbon source. Analyses of these eight putative ADH showed that expression of three was induced by ethanol, of which two were also expressed inside rice roots. The fact that waterlogged plants such as rice accumulate ethanol suggests that ethanol occurs in sufficiently high concentration within the root to induce expression of bacterial ADH. Disruption of these two ADH evoked a reduced competitiveness to the wild type in colonizing rice roots internally. Thus, it is likely that ethanol is an important carbon source for the endophytic life of Azoarcus sp.