Mammalian dimeric dihydrodiol dehydrogenase (DD) is identical to NADP+-dependent D-xylose dehydrogenase. A recent investigation showed that the three-dimensional structure of monkey DD is similar to those of prokaryotic NADP(H)-dependent glucose-fructose oxidoreductase (GFO) and 1,5-anhydro-D-fructose reductase (AFR); however, it differs in coenzyme-binding and catalytic residues. Dimeric DD has a high affinity for NADP(H) when compared with AFR and differs from both GFO and AFR in its specificity for sugars and hydrophobic xenobiotic compounds as substrates. The crystal structure of monkey dimeric DD complexed with the inhibitor isoascorbic acid has been determined at 2.59 angstroms resolution. Molecular modelling of coenzyme binding complemented with site-directed mutagenesis has been utilized to propose a binding mode for the coenzyme molecule and to gain insights into the roles of the residues comprising the active site and coenzyme-binding domain of DD. Several key residues have been identified within the coenzyme-binding domain, including Arg37, Arg41, His76 and His79, that contribute to the high affinity for coenzyme. The interaction of Arg37 and Arg41 with the 2'-phosphate and adenine-ring moiety of the coenzyme has been established from the large increases (29-fold to 438-fold) in the Kd values for NADP(H) for the R37D and R41D mutant enzymes. The mutation of several residues lining the inhibitor-binding site of DD suggested the involvement of Trp125, Phe154, Trp254 and Phe279 in determining the broad substrate specificity and inhibitor potency of the enzyme. In addition, mutants of Lys97, which is present near the catalytic residue Tyr180, greatly reduced the kcat value without changing the Kd values for coenzyme, suggesting the importance of Lys97 in the catalytic mechanism of DD.