E. coli K12 was found to utilise both D-and L-stereoisomers of alanine as sole sources of carbon, nitrogen and energy for growth. This capability was absolutely dependent upon the possession of an active membrane-bound D-alanine dehydrogenase, and was lost by mutants in which the enzyme was defective. The Michaelis constant for the enzyme with D-alanine as substrate was 30 mM, and the pH optimum about 8.9. D-alanine was the most active substrate, L-alanine was inactive and several other D-amino acids were 10--50% as active as D-alanine. Oxidation of D-alanine was linked to oxygen via a cytochrome-containing respiratory chain. Synthesis of the dehydrogenase was induced 16 to 23-fold by incubation with D- or L-alanine, but only D-alanine was intrinsically active as an inducer. L-alanine was active either as a substrate or inducer only in t he presence of an uninhibited alanine racemase which converted it to the D-isomer. The map-location of their structural genes between ara and leu, together with other similarities, indicate that D-alanine dehydrogenase and the "alaninase" of Wijsman (1972a) are the same enzyme. Both D- and L-alanine were intrinsically active as inducers of alanine racemase synthesis. The synthesis of both D-alanine dehydrogenase and alanine racemase was found to be regulated by catabolite repression.