The small genome of the Gram-positive bacterium Lactococcus lactis ssp. lactis IL1403 contains two genes that encode proteins annotated as homologues of Escherichia coli beta-hydroxyacyl-acyl carrier protein (ACP) reductase. E. coli fabG encodes beta-ketoacyl-acyl carrier protein (ACP) reductase, the enzyme responsible for the first reductive step of the fatty acid synthetic cycle. Both of the L. lactis genes are adjacent to (and predicted to be cotranscribed with) other genes that encode proteins having homology to known fatty acid synthetic enzymes. Such relationships have often been used to strengthen annotations based on sequence alignments. Annotation in the case of beta-ketoacyl-ACP reductase is particularly problematic because the protein is a member of a vast protein family, the short-chain alcohol dehydrogenase/reductase (SDR) family. The recent isolation of an E. coli fabG mutant strain encoding a conditionally active beta-ketoacyl-ACP reductase allowed physiological and biochemical testing of the putative L. lactishomologues. We report that expression of only one of the two L. lactis proteins (that annotated as FabG1) allows growth of the E. coli fabG strain under nonpermissive conditions and restores in vitro fatty acid synthetic ability to extracts of the mutant strain. Therefore, like E. coli, L. lactis has a single beta-ketoacyl-ACP reductase active with substrates of all fatty acid chain lengths. The second protein (annotated as FabG2), although inactive in fatty acid synthesis both in vivo and in vitro, was highly active in reduction of the model substrate, beta-ketobutyryl-CoA. As expected from work on the E. coli enzyme, the FabG1 beta-ketobutyryl-CoA reductase activity was inhibited by ACP (which blocks access to the active site) whereas the activity of FabG2 was unaffected by the presence of ACP. These results seem to be an example of a gene duplication event followed by divergence of one copy of the gene to encode a protein having a new function.