Fatty aldehyde dehydrogenase (FALDH; also known as ALDH3A2 or ALDH10) oxidizes medium‐ or long‐chain aliphatic aldehydes. FALDH deficiency in humans is known to be the cause of Sjögren–Larsson syndrome, in which individuals display neurological symptoms and cutaneous abnormality. FALDH‐V, a splice isoform of FALDH, is localized in the peroxisome and contributes to the oxidization of pristanal, an intermediate of the α‐oxidation pathway. FALDH‐N, another splice isoform of FALDH, is induced by peroxisomal proliferator‐activated receptor α ligands, although its activation mechanism has not been clarified. In the present study, we show that transcriptional activation of FALDH is directly regulated by peroxisomal proliferator‐activated receptor α through a direct repeat‐1 site located in the FALDH promoter. In addition, FALDH is efficiently induced by linoleic acid in rat hepatoma Fao cells through transcriptional activation by peroxisomal proliferator‐activated receptor α. Furthermore, ectopic expression of endoplasmic reticulum‐localizing FALDH‐N, but not peroxisome‐localizing FALDH‐V, suppresses endoplasmic reticulum stress caused by linoleic acid in HEK293 cells. These results suggest the autocatalytic nature of the FALDH‐N system against endoplasmic reticulum stress that is induced by polyunsaturated fatty acid; polyunsaturated fatty acid binds to peroxisomal proliferator‐activated receptor α to activate the expression of FALDH‐N, which then detoxifies polyunsaturated fatty acid‐derived fatty aldehydes and protects cells from endoplasmic reticulum stress.