The product of the CIT2 gene has the tripeptide SKL at its carboxyl terminus. This amino acid sequence has been shown to act as a peroxisomal targeting signal in mammalian cells. We examined the subcellular site of this extramitochondrial citrate synthase. Cells of Saccharomyces cerevisiae were grown on oleate medium to induce peroxisome proliferation. A fraction containing membrane-enclosed vesicles and organelles was analyzed by sedimentation on density gradients. In wild-type cells, the major peak of citrate synthase activity was recovered in the mitochondrial fraction, but a second peak of activity cosedimented with peroxisomes. The peroxisomal activity, but not the mitochondrial activity, was inhibited by incubation at pH 8.1, a characteristic of the extramitochondrial citrate synthase encoded by the CIT2 gene. In a strain in which the CIT1 gene encoding mitochondrial citrate synthase had been disrupted, the major peak of citrate synthase activity was peroxisomal, and all of the activity was sensitive to incubation at pH 8.1. Yeast cells bearing a cit2 disruption were unable to mobilize stored lipids and did not form stable peroxisomes in oleate. We conclude that citrate synthase encoded by CIT2 is peroxisomal and participates in the glyoxylate cycle.