The catalytic role of the active site metal-water complex in horse liver alcohol dehydrogenase (alcohol:NAD+ oxidoreductase, EC 1.1.1.1) is investigated on the basis of a comparative analysis of the pH dependence of steady-state kinetic parameters of the native and active-site-specific Co2+-reconstituted enzyme and on the basis of assignment of the coordination environment of the Co2+ by electron paramagnetic resonance methods. The pH dependence of the kinetic parameters for the oxidation of benzyl alcohol reveals two ionizations (pK1 approximately equal to 6.7; pK2 approximately equal to 10.6) that govern kcat and belong to the ternary enzyme-NAD+-alcohol complex and two ionizations (pK1' approximately equal to 7.5; pK2' approximately equal to 8.9) that govern kcat/Km and belong to the binary enzyme-NAD+ complex. The ionizations pK2 and pK2' decrease by 0.5-1 pK alpha unit upon replacement of the active site Zn2+ by Co2+. A similar metal ion dependence of pK2 and pK2' is observed for the oxidation of 2-propanol. We attribute these ionizations to a metal-bound water molecule. The zero-field splitting energy of the Co2+ in the binary enzyme-NADH complex and the ternary enzyme-NADH-CF3CH2OH complex is approximately equal to 22 cm-1, indicative of a pentacoordinate species. Binding of a water molecule to the metal ion as the fifth ligand in the ternary enzyme-NADH-CF3CH2OH complex is confirmed on the basis of magnetic interactions of H2(17)O with Co2+. The results indicate that the active site metal ion in catalytically competent ternary enzyme-coenzyme-substrate complexes is pentacoordinate and is ligated by a neutral water molecule in the physiological pH range. We suggest that the neutral metal-bound water molecule serves as the base catalyst for proton abstraction in alcohol oxidation.