The most prominent role of peroxisomes in photosynthetic plant tissues is their participation in photorespiration, a process also known as the oxidative C2 cycle or the oxidative photosynthetic carbon cycle. Photorespiration is an essential process in land plants, as evident from the conditionally lethal phenotype of mutants deficient in enzymes or transport proteins involved in this pathway. The oxidative C2 cycle is a salvage pathway for phosphoglycolate, the product of the oxygenase activity of ribulose 1,5-bisphosphate carboxylase/oxygenase (RubisCO), to the Calvin cycle intermediate phosphoglycerate. The pathway is highly compartmentalized and involves reactions in chloroplasts, peroxisomes, and mitochondria. The H2O2-producing enzyme glycolate oxidase, catalase, and several aminotransferases of the photorespiratory cycle are located in peroxisomes, with catalase representing the major constituent of the peroxisomal matrix in photosynthetic tissues. Although photorespiration is of major importance for photosynthesis, the identification of the enzymes involved in this process has only recently been completed. Only little is known about the metabolite transporters for the exchange of photorespiratory intermediates between peroxisomes and the other organelles involved, and about the regulation of the photorespiratory pathway. This review highlights recent developments in understanding photorespiration and identifies remaining gaps in our knowledge of this important metabolic pathway.