Alcohol oxidase of methylotrophic yeast is an FAD-containing enzyme. When in its active form, the enzyme is an octamer and located in the peroxisomes. To study the importance of FAD-binding on the activity, octamerization and intracellular localization of the enzyme, alcohol oxidase of Hansenula polymorpha was mutated in its presumed nucleotide-binding domain, which is formed by the N-terminal sequence. Whereas mutations of a glutamic acid residue (E42) reduced the stability of the octamer, it hardly affected enzyme activity and expression. However, replacements of three conserved glycines (G13, G15 and G18) and a conserved glutamic acid (E39) within the fold had severe effects. The mutations not only resulted in loss of enzyme activity but in reduced protein levels as well, probably due to decreased stability of the mutant alcohol oxidase. However, octamerization of the protein still occurred. The existence of inactive octameric proteins provides information about the formation pathway of this octameric flavoprotein.