The Escherichia coli genes frmB (yaiM) and yeiG encode two uncharacterized proteins that share 54% sequence identity and contain a serine esterase motif. We demonstrated that purified FrmB and YeiG have high carboxylesterase activity against the model substrates, p-nitrophenyl esters of fatty acids (C2-C6) and alpha-naphthyl acetate. However, both proteins had the highest hydrolytic activity toward S-formylglutathione, an intermediate of the glutathione-dependent pathway of formaldehyde detoxification. With this substrate, both proteins had similar affinity (Km = 0.41-0.43 mM), but FrmB was almost 5 times more active. Alanine replacement mutagenesis of YeiG demonstrated that Ser145, Asp233, and His256 are absolutely required for activity, indicating that these residues represent a serine hydrolase catalytic triad in this protein and in other S-formylglutathione hydrolases. This was confirmed by inspecting the crystal structure of the Saccharomyces cerevisiae S-formylglutathione hydrolase YJG8 (Protein Data Bank code 1pv1), which has 45% sequence identity to YeiG. The structure revealed a canonical alpha/beta-hydrolase fold and a classical serine hydrolase catalytic triad (Ser161, His276, Asp241). In E. coli cells, the expression of frmB was stimulated 45-75 times by the addition of formaldehyde to the growth medium, whereas YeiG was found to be a constitutive enzyme. The simultaneous deletion of both frmB and yeiG genes was required to increase the sensitivity of the growth of E. coli cells to formaldehyde, suggesting that both FrmB and YeiG contribute to the detoxification of formaldehyde. Thus, FrmB and YeiG are S-formylglutathione hydrolases with a Ser-His-Asp catalytic triad involved in the detoxification of formaldehyde in E. coli.