Methanol utilization by methylotrophic or non-methylotrophic organisms is the first step toward methanol bioconversion to higher carbon-chain chemicals. Methanol oxidation using NAD-dependent methanol dehydrogenase (Mdh) is of particular interest because it uses NAD(+) as the electron carrier. To our knowledge, only a limited number of NAD-dependent Mdhs have been reported. The most studied is the Bacillus methanolicus Mdh, which exhibits low enzyme specificity to methanol and is dependent on an endogenous activator protein (ACT). In this work, we characterized and engineered a group III NAD-dependent alcohol dehydrogenase (Mdh2) from Cupriavidus necator N-1 (previously designated as Ralstonia eutropha). This enzyme is the first NAD-dependent Mdh characterized from a Gram-negative, mesophilic, non-methylotrophic organism with a significant activity towards methanol. Interestingly, unlike previously reported Mdhs, Mdh2 does not require activation by known activators such as B. methanolicus ACT and Escherichia coli Nudix hydrolase NudF, or putative native C. necator activators in the Nudix family under mesophilic conditions. This enzyme exhibited higher or comparable activity and affinity toward methanol relative to the B. methanolicus Mdh with or without ACT in a wide range of temperatures. Furthermore, using directed molecular evolution, we engineered a variant (CT4-1) of Mdh2 that showed a 6-fold higher K cat/K m for methanol and 10-fold lower K cat/K m for n-butanol. Thus, CT4-1 represents an NAD-dependent Mdh with much improved catalytic efficiency and specificity toward methanol compared with the existing NAD-dependent Mdhs with or without ACT activation.