A newly discovered microorganism was isolated in a biologically pure culture and designated Clostridium ljungdahlii, having the identifying characteristics of ATCC No. 49587. Cultured in an aqueous nutrient medium under anaerobic conditions, this microorganism is capable of producing ethanol and acetate from CO and H.sub.2 O and/or CO.sub.2 and H.sub.2 in synthesis gas. Under optimal growth conditions, the microorganism produces acetate in preference to ethanol. Conversely, under non-growth conditions, ethanol production is favored over acetate.