The masking of charged amino or carboxy groups by N-phthalidylation and O-phthalidylation has been used to improve the absorption of many drugs, including ampicillin and 5-fluorouracil. Following absorption of such prodrugs, the phthalidyl group is hydrolysed to release 2-carboxybenzaldehyde (2-CBA) and the pharmaceutically active compound; in humans, 2-CBA is further metabolized to 2-hydroxymethylbenzoic acid by reduction of the aldehyde group. In the present work, the enzyme responsible for the reduction of 2-CBA in humans is identified as a homologue of rat aflatoxin B1-aldehyde reductase (rAFAR). This novel human aldo-keto reductase (AKR) has been cloned from a liver cDNA library, and together with the rat protein, establishes the AKR7 family of the AKR superfamily. Unlike its rat homologue, human AFAR (hAFAR) appears to be constitutively expressed in human liver, and is widely expressed in extrahepatic tissues. The deduced human and rat protein sequences share 78% identity and 87% similarity. Although the two AKR7 proteins are predicted to possess distinct secondary structural features which distinguish them from the prototypic AKR1 family of AKRs, the catalytic- and NADPH-binding residues appear to be conserved in both families. Certain of the predicted structural features of the AKR7 family members are shared with the AKR6 beta-subunits of voltage-gated K+-channels. In addition to reducing the dialdehydic form of aflatoxin B1-8,9-dihydrodiol, hAFAR shows high affinity for the gamma-aminobutyric acid metabolite succinic semialdehyde (SSA) which is structurally related to 2-CBA, suggesting that hAFAR could function as both a SSA reductase and a 2-CBA reductase in vivo. This hypothesis is supported in part by the finding that the major peak of 2-CBA reductase activity in human liver co-purifies with hAFAR protein.