Fatty acid -oxidation occurs in both mitochondria and peroxisomes. Long chain fatty acids are also metabolized by the cytochrome P450 CYP4A -oxidation enzymes to toxic dicarboxylic acids (DCAs) that serve as substrates for peroxisomal -oxidation. Synthetic peroxisome proliferators interact with peroxisome proliferator activated receptor ␣ (PPAR␣) to transcriptionally activate genes that participate in peroxisomal, microsomal, and mitochondrial fatty acid oxidation. Mice lacking PPAR␣ (PPAR␣ ؊/؊ ) fail to respond to the inductive effects of peroxisome proliferators, whereas those lacking fatty acyl-CoA oxidase (AOX ؊/؊ ), the first enzyme of the peroxisomal -oxidation system, exhibit extensive microvesicular steatohepatitis, leading to hepatocellular regeneration and massive peroxisome proliferation, implying sustained activation of PPAR␣ by natural ligands. We now report that mice nullizygous for both PPAR␣ and AOX (PPAR␣ ؊/؊ AOX ؊/؊ ) failed to exhibit spontaneous peroxisome proliferation and induction of PPAR␣-regulated genes by biological ligands unmetabolized in the absence of AOX. In AOX ؊/؊ mice, the hyperactivity of PPAR␣ enhances the severity of steatosis by inducing CYP4A family proteins that generate DCAs and since they are not metabolized in the absence of peroxisomal -oxidation, they damage mitochondria leading to steatosis. Blunting of microvesicular steatosis, which is restricted to few liver cells in periportal regions in PPAR␣ ؊/؊ AOX ؊/؊ mice, suggests a role for PPAR␣-induced genes, especially members of CYP4A family, in determining the severity of steatosis in livers with defective peroxisomal -oxidation. In agematched PPAR␣ ؊/؊ mice, a decrease in constitutive mitochondrial -oxidation with intact constitutive peroxisomal -oxidation system contributes to large droplet fatty change that is restricted to centrilobular hepatocytes. These data define a critical role for both PPAR␣ and AOX in hepatic lipid metabolism and in the pathogenesis of specific fatty liver phenotype.In animal cells, mitochondria as well as peroxisomes oxidize fatty acids via -oxidation, with long chain and very long chain fatty acids (LCFAs and VLCFAs) 1 being preferentially oxidized by peroxisomes (1-3). Peroxisomal -oxidation is carried out by two distinct groups of enzymes. The classical first group utilizes straight chain saturated fatty acyl-CoAs as substrates, whereas the second group acts on branched chain acyl-CoAs (3, 4). In the classical L-3-hydroxy-specific -oxidation spiral, dehydrogenation of acyl-CoA esters to their corresponding trans-2-enoyl-CoAs is catalyzed by fatty acyl-CoA oxidase (AOX), whereas the second and third reactions, hydration and dehydrogenation of enoyl-CoA esters to 3-ketoacyl-CoA, are catalyzed by a single enzyme, enoyl-CoA hydratase/L-3-hydroxyacyl-CoA dehydrogenase (L-bifunctional enzyme (L-PBE)) (3). The third enzyme of this classical system, 3-ketoacyl-CoA thiolase (PTL), cleaves 3-ketoacyl-CoAs to acetyl-CoA and an acylCoA that is two carbon atoms shorter than the original mo...