Non-mitochondrial citrate synthase catalyses citrate synthesis in the glyoxylate cycle in gluconeogenesis. Screening Dictyostelium discoideum mutants generated by insertional mutagenesis isolated a poor-growing mutant that displayed aberrant developmental morphology on bacterial lawns. Axenically grown mutants developed normally and formed mature fruiting bodies on buffered agar. The affected locus encoded a novel protein (CshA) that was homologous to glyoxysomal citrate synthase. cshA was expressed maximally during vegetative growth and gradually decreased through subsequent developmental stages. An in vitro citrate synthase assay revealed that cshA disruption resulted in a 50% reduction in enzyme activity, implicating CshA as an active citrate synthase. The amino-terminus of CshA was found to have an atypical mitochondrial targeting signal, instead containing a unique nonapeptide sequence (RINILANHL) that was homologous to the conserved peroxisomal targeting signal 2 (PTS2). CshA protein was shown to be localized in the peroxisomes, and the RINILANHL sequence only efficiently targeted the peroxisomal green fluorescent protein. The growth defect of cshA(-) cells was associated with the impairment of phagocytosis and fluid-phase endocytosis, independent from cytokinesis. Disrupted multicellular development on bacterial lawns resulted from the abnormal susceptibility to the environmental conditions, perhaps because of citrate insufficiency. Taken together, these results provide new insights into the function of peroxisomal citrate synthase in cell growth and multicellular development.