Direct comparison of the amino acid sequences of microsomal and soluble epoxide hydrolase superficially indicates that these enzymes are unrelated. Both proteins, however, share significant sequence similarity to a bacterial haloalkane dehalogenase that has earlier been shown to belong to the alpha/beta hydrolase fold family of enzymes. The catalytic mechanism for the dehalogenase has been elucidated in detail [Verschueren et al. (1993) Nature 363, 693-698] and proceeds via an ester intermediate where the substrate is covalently bound to the enzyme. From these observations we conclude (i) that microsomal and soluble epoxide hydrolase are distantly related enzymes that have evolved from a common ancestral protein together with the haloalkane dehalogenase and a variety of other proteins specified in the present paper, (ii) that these enzymes most likely belong to the alpha/beta hydrolase fold family of enzymes and (iii) that the enzymatic epoxide hydrolysis proceeds via a hydroxy ester intermediate, in contrast to the presently favoured base-catalyzed direct attack of the epoxide by an activated water.