A considerable amount of methylformate accumulated in the culture medium of methanol-grown methylotrophic yeasts. Methylformate is considered as an intermediate in a novel formaldehyde oxidation pathway. Through investigations with Pichia methanolica, methylformate formation was found to be catalysed by a new type of alcohol dehydrogenase, which was named methylformate synthase. When cells were grown on a relatively high concentration of methanol or exposed to a high concentration of formaldehyde, formation of methylformate was enhanced and the level of methylformate synthase in the cells increased. How methylformate synthase is involved in formaldehyde oxidation and formaldehyde detoxification is discussed.