Understanding of ectomycorrhiza functioning has been slowed down by less investigations of this symbiotic association at the molecular level. In this study, the possible role of a specific fungal aldehyde dehydrogenase (ALDH) in the host-specific mutual symbiosis between the basidiomycete fungus Tricholoma vaccinum and its compatible host plant spruce (Picea abies) was investigated. Also, the involvement of indole-3-acetic acid (IAA) in ectomycorrhiza formation, which has been controversially observed and discussed in literature, was investigated in detail. As a first step, the ectomycorrhiza-specifically expressed gene ald1 was isolated from T. vaccinum. Sequence analysis showed that the ORF of ald1 is interrupted by 16 introns. The conceptually translated protein, Ald1, of 502 amino acids with a predicted molecular mass of 53 kDa was subsequently confirmed by Western blotting. An alignment of Ald1 with other 53 specific fungal ALDHs, representing all major phyla in the kingdom of fungi, was used to reinvestigate the evolutionary relationships in this enzyme family. The phylogenetic reconstruction, under Bayesian inference, revealed that, with the exception of chytridiomycota, fungal ALDHs, which clustered in distinct taxonomic groups in the phylogram, underwent two major duplication events during evolution resulting in multiple ALDH paralogs, with specifically high number of paralogs in higher fungi. Stress Response Elements (STREs) were observed in the promoter region of ald1, suggesting a possible role of stress induction for this gene. This prompted us to investigate the possible aldehyde- and alcohol-mediated stress induction of ald1 expression by real time RT-PCR, which revealed significantly increased gene expression upon addition of 0.1 mM indole-3-acetaldehyde (IAAld), 0.1 mM benzaldehyde or 0.01% ethanol. Furthermore, heterologous expression of ald1 in Escherichia coli and subsequent in vitro enzyme activity assay demonstrated the oxidation of various aldehydes with different kinetics using both NAD+ and NADP+ as cofactors. In order to understand the biological function of this gene in T. vaccinum, it was overexpressed in the fungus using Agrobacterium tumefaciens-mediated transformation (ATMT). Functional analysis showed that Ald1-overproducing transformants significantly reduced ethanol stress. These results unequivocally demonstrated the ability of Ald1 to circumvent ethanol stress, a critical function in ectomycorrhizal habitats. In addition, the induction of ald1 expression by IAAld suggests that the gene might be involved, at least partly, in production of indole-3-acetic acid (IAA).