Reaction of glycolaldehyde with the binary E-NADP complex of bovine kidney aldose reductase (ALR2) produces an enzyme-bound chromophore whose absorbance (lambd max 341 nm) and fluorescence (lambda ex max 341 nm; lambda emit max 421 nm) properties are distinct from those of NADPH or E.NADPH yet are consistent with the proposed covalent adduct structure [1,4-dihydro-4-(1-hydroxy-2-oxoethyl)nicotinamide adenine dinucleotide phosphate]. The kinetics of adduct formation, both in solution and at the enzyme active site, support a mechanism involving rate-determining enolization of glycolaldehyde at high [NADP+] or [E.NADP]. At low [NADP+] or [E.NADP] the reaction is second-order overall, but the ALR2-mediated reaction displays saturation by glycolaldehyde due to competition of the aldehyde (plus hydrate) and enol for E.NADP. Measurement of the pre-steady-state burst of E-adduct formation confirms that glycolaldehyde enol is the reactive species and gives a value of 1.3 x 10(-6) for Kenol = [enol]/[( aldehyde] + [hydrate]), similar to that determined by trapping the enol with I3-. At the ALR2 active site, the rate of adduct formation is enhanced 79,000-fold and the adduct is stabilized greater than or equal to 13,000-fold relative to the reaction with NADP+ in solution. A portion of this enhancement is ascribed to specific interaction of NADP+ with the enzyme since the 3-acetylpyridine analogue, (AP)ADP+, gives values that are 15-200-fold lower. Additional evidence for strong interaction of ALR2 with both NADP+ and NADPH is reported. Yet, because dissociation of adduct is slow, catalysis of the overall adduct formation reaction by ALR2 is less than or equal to 67-fold.