In the propane-utilizing bacterium Gordonia sp. strain TY-5, propane was shown to be oxidized to 2-propanol and then further oxidized to acetone. In this study, the subsequent metabolism of acetone was studied. Acetone-induced proteins were found in extracts of cells induced by acetone, and a gene cluster designated acmAB was cloned on the basis of the N-terminal amino acid sequences of acetone-induced proteins. The acmA and acmB genes encode a Baeyer-Villiger monooxygenase (BVMO) and esterase, respectively. The BVMO encoded by acmA was purified from acetone-induced cells of Gordonia sp. strain TY-5 and characterized. The BVMO exhibited NADPH-dependent oxidation activity for linear ketones (C3 to C10) and cyclic ketones (C4 to C8). Escherichia coli expressing the acmA gene oxidized acetone to methyl acetate, and E. coli expressing the acmB gene hydrolyzed methyl acetate. Northern blot analyses revealed that polycistronic transcription of the acmAB gene cluster was induced by propane, 2-propanol, and acetone. These results indicate that the acmAB gene products play an important role in the metabolism of acetone derived from propane oxidation and clarify the propane metabolism pathway of strain TY-5 (propane --> 2-propanol --> acetone --> methyl acetate --> acetic acid + methanol). This paper provides the first evidence for BVMO-dependent acetone metabolism.