Pex11p (formerly Pmp27) has been implicated in peroxisomal proliferation (Erdmann, R., and G. Blobel. 1995. J. Cell Biol. 128; 509-523; Marshall, P.A., Y.I. Krimkevich, R.H. Lark, J.M. Dyer, M. Veenhuis, and J.M. Goodman, 1995. J. Cell Biol. 129; 345-355). In its absence, peroxisomes in Saccharomyces cerevisiae fail to proliferate in response to oleic acid; instead, one or two large peroxisomes are formed. Conversely, overproduction of Pex11p causes an increase in peroxisomal number. In this report, we confirm the function of Pex11p in organelle proliferation by demonstrating that this protein can cause fragmentation in vivo of large peroxisomes into smaller organelles. Pex11p is on the inner surface of the peroxisomal membrane. It can form homodimers, and this species is more abundant in mature peroxisomes than in proliferating organelles. Removing one of the three cysteines in the protein inhibits homodimerization. This cysteine 3-->alanine mutation leads to an increase in number and a decrease in peroxisomal density, compared with the wild-type protein, in response to oleic acid. We propose that the active species is the "monomeric" form, and that the increasing oxidative metabolism within maturing peroxisomes causes dimer formation and inhibition of further organelle division.