The P450 2E1-catalyzed oxidation of ethanol to acetaldehyde is characterized by a kinetic deuterium isotope effect that increases K(m) with no effect on k(cat), and rate-limiting product release has been proposed to account for the lack of an isotope effect on k(cat) (Bell, L. C., and Guengerich, F. P. (1997) J. Biol. Chem. 272, 29643-29651). Acetaldehyde is also a substrate for P450 2E1 oxidation to acetic acid, and k(cat)/K(m) for this reaction is at least 1 order of magnitude greater than that for ethanol oxidation to acetaldehyde. Acetic acid accounts for 90% of the products generated from ethanol in a 10-min reaction, and the contribution of this second oxidation has been overlooked in many previous studies. The noncompetitive intermolecular kinetic hydrogen isotope effects on acetaldehyde oxidation to acetic acid ((H)(k(cat)/K(m))/(D)(k(cat)/K(m)) = 4.5, and (D)k(cat) = 1.5) are comparable with the isotope effects typically observed for ethanol oxidation to acetaldehyde, and k(cat) is similar for both reactions, suggesting a possible common catalytic mechanism. Rapid quench kinetic experiments indicate that acetic acid is formed rapidly from added acetaldehyde (approximately 450 min(-1)) with burst kinetics. Pulse-chase experiments reveal that, at a subsaturating concentration of ethanol, approximately 90% of the acetaldehyde intermediate is directly converted to acetic acid without dissociation from the enzyme active site. Competition experiments suggest that P450 2E1 binds acetic acid and acetaldehyde with relatively high K(d) values, which preclude simple tight binding as an explanation for rate-limiting product release. The existence of a rate-determining step between product formation and release is postulated. Also proposed is a conformational change in P450 2E1 occurring during the course of oxidation and the discrimination of P450 2E1 between acetaldehyde and its hydrated form, the gem-diol. This multistep P450 reaction is characterized by kinetic control of individual reaction steps and by loose binding of all ligands.