Alcaligenes eutrophus cells containing a soluble NAD-dependent hydrogenase was evaluated as a NADH regenerating catalyst. In the presence of hydrogen and permeabilized A. eutrophus cells, NADH regeneration was achieved, and reductions catalyzed by horse liver alcohol dehydrogenase and lactate dehydrogenase proceeded to 90-99% conversion. The operational stability of the hydrogenase was improved by the addition of reducing agents such as dithiothreitol and by immobilization of the cells in calcium alginate.