Alcohol oxidase (AO) expressed in transformed oleic acid-grown Saccharomyces cerevisiae, accumulated into microbodies to up to 8% of the total protein content of the organelles. This led to a small increase in volume fraction of the organelles, but not in their number. Most of the AO protein was present in large aggregates in the cytosol. The AO synthesized was inactive, irrespective of its subcellular localization and did not contain FAD. When the same AO gene was expressed in fused protoplasts of transformed S. cerevisiae and Hansenula polymorpha, the enzyme was properly assembled and activated in H. polymorpha microbodies.