Saccharomyces cerevisiae peroxisomal 3-ketoacyl-CoA thiolase is a soluble matrix protein that does not end in a consensus peroxisomal targeting signal-1. The amino terminus of S. cerevisiae peroxisomal thiolase is conserved in 6 of 11 residues with the amino terminus of rat thiolase B, shown to act as a peroxisomal targeting signal-2 (Swinkels, B.W., Gould, S.J., Bodnar, A.G., Rachubinski, R.A., and Subramani, S. (1991) EMBO J. 10, 3255-3262). Unlike mammalian peroxisomal thiolases, there is no extensive cleavage of S. cerevisiae thiolase upon import into peroxisomes. We demonstrate by in vivo expression that the amino-terminal 16 amino acids of S. cerevisiae thiolase are necessary and sufficient for targeting to peroxisomes. This result implies that yeast, like mammalian cells, can target proteins to the peroxisomal matrix by at least two different routes. We also demonstrate by targeted mutagenesis and in vivo expression of mutated thiolase genes that three amino acids conserved in the amino termini of all known thiolases are critical for efficient targeting of S. cerevisiae thiolase to peroxisomes.