The flux of fatty acids toward beta-oxidation was analyzed in Saccharomyces cerevisiae by monitoring polyhydroxyalkanoate synthesis in the peroxisome from the polymerization, by a bacterial polyhydroxyalkanoate synthase, of the beta-oxidation intermediates 3-hydroxyacyl-CoAs. Synthesis of polyhydroxyalkanoate was dependent on the beta-oxidation enzymes acyl-CoA oxidase and enoyl-CoA hydratase/3-hydroxyacyl-CoA dehydrogenase multifunctional protein, which are involved in generating 3-hydroxyacyl-CoAs, and on the peroxin PEX5, which is involved in the import of proteins into the peroxisome. In wild type cells grown in media containing fatty acids, the polyhydroxyalkanoate monomer composition was largely influenced by the nature of the external fatty acid, such that even-chain monomers are generated from oleic acid and odd-chain monomers are generated from heptadecenoic acid. In contrast, polyhydroxyalkanoate containing predominantly 3-hydroxyoctanoate, 3-hydroxydecanoate, and 3-hydroxydodecanoate was synthesized in a mutant deficient in the peroxisomal 3-ketothiolase (fox3 Delta 0) growing either on oleic acid or heptadecenoic acid as well as in wild type and fox3 Delta 0 mutants grown on glucose or raffinose, indicating that 3-hydroxyacyl-CoAs used for polyhydroxyalkanoate synthesis were generated from the degradation of intracellular short- and medium-chain fatty acids by the beta-oxidation cycle. Inhibition of fatty acid biosynthesis with cerulenin blocked the synthesis of polyhydroxyalkanoate from intracellular fatty acids but still enabled the use of extracellular fatty acids for polymer production. Mutants affected in the synthesis of lipoic acid showed normal polyhydroxyalkanoate synthesis capacity. Together, these results uncovered the existence of a substantial futile cycle whereby short- and medium-chain intermediates of the cytoplasmic fatty acid biosynthetic pathway are directed toward the peroxisomal beta-oxidation pathway.