Industrial ethanol production involves distillation to isolate ethanol from crude fermentation products, which is a water and energy consuming process limits the location of ethanol plants to areas with sufficient water supply. To address this problem, we propose a novel pathway of producing ethanol from glucose. An acetaldehyde dehydrogenase(ACDH) gene from Salmonella typhimurium is cloned into the pET-41a derived plasmid pBE522 and expressed in Escherichia coli K-12 strain MG1655. The exogenous ACDH gene is able to convert acetyl-CoA into acetaldehyde in in vitro enzyme assay. By eliminating competing pathways, the recombinant E. coli strain produces only acetaldehyde and hydrogen as major products, when grown anaerobically on minimal medium with glucose as sole carbon source. Currently, the hydrogen concentration is low. Acetaldehyde and hydrogen, which are both gaseous molecules under fermentation condition (37℃), can be removed from the fermentation mix by an inert carrier gas and converted to ethanol by chemical catalysis. This avoids the toxicity of accumulating acetaldehyde in the culture and allows continuous fermentation. This research gives a promising solution to greatly reduce the energy and water use in ethanol plants by bypassing distillation; moreover, it provides an improved method for the production of acetaldehyde from glucose and a paradigm for production of other chemicals with hydrogen as a co-product.