In the present study we have cloned and characterized a novel rat peroxisomal multifunctional enzyme (MFE) named perMFE-II. The purified 2-enoyl-CoA hydratase 2 with an M(r) of 31500 from rat liver [Malila, Siivari, Mäkelä, Jalonen, Latipää, Kunau and Hiltunen (1993) J. Biol. Chem. 268, 21578-21585] was subjected to tryptic fragmentation and the resulting peptides were isolated and sequenced. Surprisingly, the full-length cDNA, amplified by PCR, had an open reading frame of 2205 bp encoding a polypeptide with a predicted M(r) of 79,331 and contained a potential peroxisomal targeting signal in the C-terminus (Ala-Lys-Leu). The sequenced peptide fragments of hydratase 2 gave a full match in the middle portion of the cDNA-derived amino acid sequence. The predicted amino acid sequence showed a high degree of similarity with pig 17 beta-hydroxysteroid dehydrogenase type IV and MFE of yeast peroxisomal beta-oxidation. Recombinant perMFE-II (produced in Pichia pastoris) had 2-enoyl-CoA hydratase 2 and D-specific 3-hydroxyacyl-CoA dehydrogenase activities and was catalytically active with several straight-chain trans-2-enoyl-CoA, 2-methyltetradecenoyl-CoA and pristenoyl-CoA esters. The results showed that in addition to an earlier described multifunctional isomerase-hydratase-dehydrogenase enzyme from rat liver peroxisomes (perMFE-I), another MFE exists in rat liver peroxisomes. They both catalyse sequential hydratase and dehydrogenase reactions of beta-oxidation but through reciprocal stereochemical courses.