PAY genes are required for peroxisome assembly in the yeast Yarrowia lipolytica. Here we show that a mutant strain, pay2, is disrupted for the import of proteins targeted by either peroxisomal targeting signal-1 or -2. Electron microscopy of pay2 cells revealed the presence of small peroxisomal "ghosts," similar to the vesicular structures found in fibroblasts of patients with the human peroxisome assembly disorder, Zellweger syndrome. Functional complementation of pay2 with a plasmid library of Y. lipolytica genomic DNA identified a gene, PAY2, that restores growth of pay2 on oleic acid, import of catalase and multifunctional enzyme into peroxisomes, and formation of wild type peroxisomes. The PAY2 gene encodes Pay2p, a hydrophobic polypeptide of 404 amino acids. An antibody raised against Pay2p recognizes a polypeptide of approximately 42-kDa whose synthesis is induced by growth of Y. lipolytica on oleic acid. Pay2p is a peroxisomal integral membrane protein, as it localizes to carbonate-stripped peroxisomal membranes. Pay2p shows no identity to any known protein. Our results suggest that Pay2p is essential for the activity of the peroxisomal import machinery but does not affect the initial steps of peroxisomal membrane proliferation.