Hypobiosis (facultative developmental arrest) is the most important life-cycle adaptation ensuring survival of parasitic nematodes under adverse conditions. Little is known about such survival mechanisms, although ascarosides (ascarylose with fatty acid-derived side chains) have been reported to mediate the formation of dauer larvae in the free-living nematode Caenorhabditis elegans. Here, we investigated the role of a key gene acox-1, in the larval development of Haemonchus contortus, one of the most important parasitic nematodes that employ hypobiosis as a routine survival mechanism. In this parasite, acox-1 encodes three proteins (ACOXs) that all show a fatty acid oxidation activity in vitro and in vivo, and interact with a peroxin PEX-5 in peroxisomes. In particular, a peroxisomal targeting signal type1 (PTS1) sequence is required for ACOX-1 to be recognised by PEX-5. Analyses on developmental transcription and tissue expression show that acox-1 is predominantly expressed in the intestine and hypodermis of H. contortus, particularly in the early larval stages in the environment and the arrested fourth larval stage within host animals. Knockdown of acox-1 and pex-5 in parasitic H. contortus shows that these genes play essential roles in the post-embryonic larval development and likely in the facultative arrest of this species. A comprehensive understanding of these genes and the associated β-oxidation cycle of fatty acids should provide novel insights into the developmental regulation of parasitic nematodes, and into the discovery of novel interventions for species of socioeconomic importance.