Reductions of carbonyl groups catalyzed by oxidoreductases are involved in all biological processes and are often a class of important biocatalyst. In this article, we report a novel enzyme designated as diketoreductase (DKR) that was able to reduce two carbonyl groups in a diketo ester to corresponding dihydroxy ester with excellent stereoselectivity. The DKR was cloned from Acinetobacter baylyi by reverse genetic method, heterogeneously expressed in Escherichia coli, and purified to homogeneity by two chromatographic steps. This novel enzyme exhibited dual cofactor specificity, with a preference of NADH over NADPH. The dihydroxy ester product catalyzed by the DKR was only 3R,5S-stereoisomer with both diastereomeric excess and enantiomeric excess values more than 99.5%. In addition, some biochemical properties of the enzyme, such as the optimal pH and temperature, were also characterized. Furthermore, sequence analysis indicated that this new enzyme was homologous to bacterial 3-hydroxyacyl coenzyme-A dehydrogenase. More importantly, based on the unique catalytic activity and excellent stereoselectivity, the DKR could be utilized in the synthesis of valuable chiral drug intermediates, such as Lipitor.