Dihydroxyacetone kinase (DAK) is essential for methanol assimilation in methylotrophic yeasts. We have cloned the DAK gene from Pichia pastoris by functional complementation of a mutant that was unable to grow on methanol. An open reading frame of 1824 bp was identified that encodes a 65.3 kDa protein with high homology to DAK from Saccharomyces cerevisiae. Although DAK from P. pastoris contained a C-terminal tripeptide, TKL, which we showed can act as a peroxisomal targeting signal when fused to the green fluorescent protein, the enzyme was primarily cytosolic. The TKL tripeptide was not required for the biochemical function of DAK because a deletion construct lacking the DNA encoding this tripeptide was able to complement the P. pastoris dak delta mutant. Peroxisomes, which are essential for growth of P. pastoris on methanol, were present in the dak delta mutant and the import of peroxisomal proteins was not disturbed. The dak delta mutant grew at normal rates on glycerol and oleate media. However, unlike the wild-type cells, the dak delta mutant was unable to grow on methanol as the sole carbon source but was able to grow on dihydroxyacetone at a much slower rate. The metabolic pathway explaining the reduced growth rate of the dak delta mutant on dihydroxyacetone is discussed. The nucleotide sequence reported in this paper has been submitted to GenBank with Accession Number AF019198.