ABSTRACT Mannosylglycerate (MG) is a common compatible solute found in thermophilic and hyperthermophilic prokaryotes. In this study we characterized a mesophilic and bifunctional mannosylglycerate synthase (MGSD) encoded in the genome of the bacterium Dehalococcoides ethenogenes. mgsD encodes two domains with extensive homology to mannosyl-3-phosphoglycerate synthase (MPGS, EC 2.4.1.217) and to mannosyl-3-phosphoglycerate phosphatase (MPGP, EC 3.1.3.70), which catalyze the consecutive synthesis and dephosphorylation of mannosyl-3-phosphoglycerate to yield MG in Pyrococcus horikoshii , Thermus thermophilus , and Rhodothermus marinus . The bifunctional MGSD was overproduced in Escherichia coli , and we confirmed the combined MPGS and MPGP activities of the recombinant enzyme. The optimum activity of the enzyme was at 50°C. To examine the properties of each catalytic domain of MGSD, we expressed them separately in E. coli . The monofunctional MPGS was unstable, while the MPGP was stable and was characterized. Dehalococcoides ethenogenes cannot be grown sufficiently to identify intracellular compatible solutes, and E. coli harboring MGSD did not accumulate MG. However, Saccharomyces cerevisiae expressing mgsD accumulated MG, confirming that this gene product can synthesize this compatible solute and arguing for a role in osmotic adjustment in the natural host. We did not detect MGSD activity in cell extracts of S. cerevisiae . Here we describe the first gene and enzyme for the synthesis of MG from a mesophilic microorganism and discuss the possible evolution of this bifunctional MGSD by lateral gene transfer from thermophilic and hyperthermophilic organisms.