Reductions of carbonyl groups catalyzed by oxidoreduc-tases are involved in all biological processes and are often a class of important biocatalyst. In this article, we report a novel enzyme designated as diketoreductase (DKR) that was able to reduce two carbonyl groups in a diketo ester to corresponding dihydroxy ester with excel-lent stereoselectivity. The DKR was cloned from Acinetobacter baylyi by reverse genetic method, heteroge-neously expressed in Escherichia coli, and purified to homogeneity by two chromatographic steps. This novel enzyme exhibited dual cofactor specificity, with a prefer-ence of NADH over NADPH. The dihydroxy ester product catalyzed by the DKR was only 3R,5S-stereoi-somer with both diastereomeric excess and enantiomeric excess values more than 99.5%. In addition, some bio-chemical properties of the enzyme, such as the optimal pH and temperature, were also characterized. Furthermore, sequence analysis indicated that this new enzyme was homologous to bacterial 3-hydroxyacyl coenzyme-A dehydrogenase. More importantly, based on the unique catalytic activity and excellent stereoselec-tivity, the DKR could be utilized in the synthesis of valuable chiral drug intermediates, such as Lipitor .