Peroxisomes are thought to have played a key role in the evolution of metabolic networks of photosynthetic organisms by connecting oxidative and biosynthetic routes operating in different compartments. While the various oxidative pathways operating in the peroxisomes of higher plants are fairly well characterized, the reactions present in the primitive peroxisomes ( microbodies) of algae are poorly understood. Screening of a Chlamydomonas insertional mutant library identified a strain strongly impaired in oil remobilization and defective in Cre05.g232002 (CrACX2), a gene encoding a member of the acyl-CoA oxidase/dehydrogenase superfamily. The purified recombinant CrACX2 expressed in Escherichia coli catalyzed the oxidation of fatty acyl-CoAs into trans-2-enoyl-CoA and produced H2O2. This result demonstrated that CrACX2 is a genuine acyl-CoA oxidase, which is responsible for the first step of the peroxisomal fatty acid ( FA) beta-oxidation spiral. A fluorescent protein-tagging study pointed to a peroxisomal location of CrACX2. The importance of peroxisomal FA beta-oxidation in algal physiology was shown by the impact of the mutation on FA turnover during day/night cycles. Moreover, under nitrogen depletion the mutant accumulated 20% more oil than the wild type, illustrating the potential of beta-oxidation mutants for algal biotechnology. This study provides experimental evidence that a plant-type FA beta-oxidation involving H2O2- producing acyl-CoA oxidation activity has already evolved in the microbodies of the unicellular green alga Chlamydomonas reinhardtii.