When grown on ethene Mycobacterium strain E3 produces epoxyalkanes from alkenes in an oxygen- and NADH-dependent reaction. The process of co-factor regeneration was studied by analysing the intracellular pools of NADH and storage material during the production of 1,2-epoxypropane from propene. With the depletion of NADH the production of 1,2-epoxypropane stopped. NADH could be regenerated from the oxidation of added co-substrate or from oxidation of storage material. Cells cultivated in chemostat culture under nitrogen limitation produced more 1,2-epoxypropane compared to cells cultivated under carbon limitation, due to their higher content of storage material. Addition of glucose to cells grown under carbon limitation stimulated the formation of 1,2-epoxypropane. The uptake of glucose resulted in the accumulation of storage material, which was utilized after depletion of the glucose. Glycogen and trehalose were the preferred forms of storage material used for co-factor regeneration. From the results it was concluded that formation and utilization of storage material play a crucial role in the process of co-factor regeneration in Mycobacterium strain E3.