The high biotoxicity of selenium (Se) has spurred research into its microbial biotransformation into less toxic Se nanoparticles (SeNPs). However, the molecular mechanisms underlying microbially driven selenite transformation remain largely unknown. In the present study, Acinetobacter sp. SX5, a bacterial strain with high Se reduction capacity, was isolated from soil. The biotransformation of selenite by SX5 and the molecular mechanisms underlying the formation of SeNPs were investigated. SX5 almost completely transformed 5.0 mM selenite into intracellular and extracellular spherical SeNPs within 48 h. Fourier-transform infrared spectroscopy indicated that lipids, proteins, and carbohydrates were present on the surface of these SeNPs. Transcriptomic data subsequently revealed the significant upregulation of genes related to redox homeostasis and arsenate, pyruvate, and butanoate metabolism pathways. Gene mutation/complementation analysis confirmed that arsenate reductase (arsC) and NAD(P)-dependent alcohol dehydrogenase (dhaT1) facilitated selenite reduction in vivo. In vitro assays found that arsC and dhaT1 catalyzed Se(IV) reduction with NADPH acting as co-factor. To the best of our knowledge, this study is the first to present evidence for the participation of arsC and dhaT1 in selenite reduction in vivo, providing important insights into the molecular mechanisms underlying the biotransformation of Se(IV) and the biogenesis of SeNPs using Se-reducing bacteria.