Aureobacterium barkerei strain KDO-37-2 (ATCC 49977) KDO aldolase (EC 4.1.2.23) isolated therefrom are disclosed. The DKDO aldolase is further disclosed to have a broad substrate specificity with respect to its reverse reaction, i.e. the condensation of aldoses with pyruvate to form a wide range of 2-keto-3-deoxy-onic acids, including 2-keto-3-deoxy-nonulosonic acid, 2-keto-3-deoxy-octulosonic acid, 2-keto-3-deoxy-heptulosonic acid, and 2-keto-3-deoxy-hexulosonic acid. In particular, 3-deoxy-D-manno-2-octulosonic acid (D-KDO), a vital component of lipopolysaccharides found in the bacterial outer membrane may be synthesized from D-arabinose and pyruvate in 67% yield. Additionally, protected forms of the KDO aldolase products, e.g. hexaacetyl 2-keto-3-deoxy-nonulosonic acid and pentaacetyl 2-keto-3-deoxy-octulosonic acid, may be decarboxylated to form the corresponding 2-deoxy-aldoses, e.g. 2-deoxy-octulose and 2-deoxy-heptulose respectively.