The Gram-positive soil bacterium Arthrobacter sp. strain TS-15 (DSM 32400), which is capable of metabolizing ephedrine as a sole source of carbon and energy, was isolated. According to 16S rRNA gene sequences and comparative genomic analysis, Arthrobacter sp. TS-15 is closely related to Arthrobacter aurescens. Distinct from all known physiological paths, ephedrine metabolism by Arthrobacter sp. TS-15 is initiated by the selective oxidation of the hydroxyl function at the alpha-C atom, yielding methcathinone as the primary degradation product. Rational genome mining revealed a gene cluster potentially encoding the novel pathway. Two genes from the cluster, which encoded putative short-chain dehydrogenases, were cloned and expressed in Escherichia coli. The obtained enzymes were strictly NAD dependent and catalyzed the oxidation of ephedrine to methcathinone. Pseudoephedrine dehydrogenase (PseDH) selectively converted (S,S)-(+)-pseudoephedrine and (S,R)-(+)-ephedrine to (S)- and (R)-methcathinone, respectively. Ephedrine dehydrogenase (EDH) exhibited strict selectivity for the oxidation of the diastereomers (R,S)-(–)-ephedrine and (R,R)-(–)-pseudoephedrine.