ABSTRACT Clostridium thermocellum and Thermoanaerobacterium saccharolyticum are thermophilic bacteria that have been engineered to produce ethanol from the cellulose and hemicellulose fractions of biomass, respectively. Although engineered strains of T. saccharolyticum produce ethanol with a yield of 90% of the theoretical maximum, engineered strains of C. thermocellum produce ethanol at lower yields (∼50% of the theoretical maximum). In the course of engineering these strains, a number of mutations have been discovered in their adhE genes, which encode both alcohol dehydrogenase (ADH) and aldehyde dehydrogenase (ALDH) enzymes. To understand the effects of these mutations, the adhE genes from six strains of C. thermocellum and T. saccharolyticum were cloned and expressed in Escherichia coli , the enzymes produced were purified by affinity chromatography, and enzyme activity was measured. In wild-type strains of both organisms, NADH was the preferred cofactor for both ALDH and ADH activities. In high-ethanol-producing (ethanologen) strains of T. saccharolyticum , both ALDH and ADH activities showed increased NADPH-linked activity. Interestingly, the AdhE protein of the ethanologenic strain of C. thermocellum has acquired high NADPH-linked ADH activity while maintaining NADH-linked ALDH and ADH activities at wild-type levels. When single amino acid mutations in AdhE that caused increased NADPH-linked ADH activity were introduced into C. thermocellum and T. saccharolyticum , ethanol production increased in both organisms. Structural analysis of the wild-type and mutant AdhE proteins was performed to provide explanations for the cofactor specificity change on a molecular level. IMPORTANCE This work describes the characterization of the AdhE enzyme from different strains of C. thermocellum and T. saccharolyticum . C. thermocellum and T. saccharolyticum are thermophilic anaerobes that have been engineered to make high yields of ethanol and can solubilize components of plant biomass and ferment the sugars to ethanol. In the course of engineering these strains, several mutations arose in the bifunctional ADH/ALDH protein AdhE, changing both enzyme activity and cofactor specificity. We show that changing AdhE cofactor specificity from mostly NADH linked to mostly NADPH linked resulted in higher ethanol production by C. thermocellum and T. saccharolyticum .