β-Oxidation occurs in both mitochondria and peroxisomes. Mitochondria catalyze the β-oxidation of the bulk of short-, medium-, and long-chain fatty acids derived from diet, and this pathway constitutes the major process by which fatty acids are oxidized to generate energy. Peroxisomes are involved in the β-oxidation chain shortening of long-chain and very-long-chain fatty acyl-coenzyme (CoAs), long-chain dicarboxylyl-CoAs, the CoA esters of eicosanoids, 2-methyl-branched fatty acyl-CoAs, and the CoA esters of the bile acid intermediates di- and trihydroxycoprostanoic acids, and in the process they generate H₂O₂. Long-chain and very-long-chain fatty acids (VLCFAs) are also metabolized by the cytochrome P450 CYP4A ω-oxidation system to dicarboxylic acids that serve as substrates for peroxisomal β-oxidation. The peroxisomal β-oxidation system consists of (a) a classical peroxisome proliferator–inducible pathway capable of catalyzing straight-chain acyl-CoAs by fatty acyl-CoA oxidase, L-bifunctional protein, and thiolase, and (b) a second noninducible pathway catalyzing the oxidation of 2-methyl-branched fatty acyl-CoAs by branched-chain acyl-CoA oxidase (pristanoyl-CoA oxidase/trihydroxycoprostanoyl-CoA oxidase), D-bifunctional protein, and sterol carrier protein (SCP)x. The genes encoding the classical β-oxidation pathway in liver are transcriptionally regulated by peroxisome proliferator–activated receptor α (PPARα). Evidence derived from mice deficient in PPARα, peroxisomal fatty acyl-CoA oxidase, and some of the other enzymes of the two peroxisomal β-oxidation pathways points to the critical importance of PPARα and of the classical peroxisomal fatty acyl-CoA oxidase in energy metabolism, and in the development of hepatic steatosis, steatohepatitis, and liver cancer.