Conjugated polyketone reductase C2 (CPR-C2) from Candida parapsilosis IFO 0708, identified as a nicotinamide adenine dinucleotide phosphate (NADPH)-dependent ketopantoyl lactone reductase, belongs to the aldo-keto reductase superfamily. This enzyme reduces ketopantoyl lactone to d-pantoyl lactone in a strictly stereospecific manner. To elucidate the structural basis of the substrate specificity, we determined the crystal structures of the apo CPR-C2 and CPR-C2/NADPH complex at 1.70 and 1.80 resolutions, respectively. CPR-C2 adopted a triose-phosphate isomerase barrel fold at the core of the structure. Binding with the cofactor NADPH induced conformational changes in which Thr27 and Lys28 moved 15 and 5.0 , respectively, in the close vicinity of the adenosine 2'-phosphate group of NADPH to form hydrogen bonds. Based on the comparison of the CPR-C2/NADPH structure with 3-alpha-hydroxysteroid dehydrogenase and mutation analyses, we constructed substrate binding models with ketopantoyl lactone, which provided insight into the substrate specificity by the cofactor-induced structure. The results will be useful for the rational design of CPR-C2 mutants targeted for use in the industrial manufacture of ketopantoyl lactone.