Peroxisome assembly mutants in the methylotrophic yeast, Hansenula polymorpha, were selected by a novel procedure involving the inability of mutants to use both oleic acid and methanol as carbon sources. These compounds are both metabolized within peroxisomes through two different enzymatic pathways. 15 mutant strains called mut (methanol non-utilizing) were isolated. These strains were assigned to ten genetic complementation groups. Subcellular fractionation analysis showed that peroxisomal matrix enzymes were mislocalized to the cytoplasm in mut strains. Electron microscopy confirmed that the inability of mut strains to grow on oleic acid and methanol was due to defects in peroxisome assembly. Functional complementation of a mutant strain, mut2, with a plasmid library of H. polymorpha genomic DNA sequences has identified a gene, PAH2, that restores growth on methanol and the correct localization of matrix enzymes to the peroxisome. PAH2 encodes Pah2p, a polypeptide of 569 amino acids that is a member of the tetratricopeptide repeat (TPR) family of proteins. Pah2p shows identity with Pas8p and Pas10p, two proteins required for peroxisome assembly in the yeasts Pichia pastoris and Saccharomyces cerevisiae, respectively, and which have been suggested to be receptors that recognize peroxisomal targeting signal-1 (PTS1) motifs.