The molecular mechanisms underlying protein turnover and enzyme regulation in the peroxisomal matrix remain largely unknown. Trypsin domain-containing 1 (Tysnd1) and peroxisomal Lon protease (PsLon) are newly identified peroxisomal matrix proteins that harbor both a serine protease-like domain and a peroxisome-targeting signal 1 (PTS1) sequence. Tysnd1 processes several PTS1-containing proteins and cleaves N-terminal presequences from PTS2-containing protein precursors. Here we report that knockdown of Tysnd1, but not PsLon, resulted in accumulation of endogenous β-oxidation enzymes in their premature form. The protease activity of Tysnd1 was inactivated by intermolecular self-conversion of the 60-kDa form to 15- and 45-kDa chains, which were preferentially degraded by PsLon. Peroxisomal β-oxidation of a very long fatty acid was significantly decreased by knockdown of Tysnd1 and partially lowered by PsLon knockdown. Taken together, these data suggest that Tysnd1 is a key regulator of the peroxisomal β-oxidation pathway via proteolytic processing of β-oxidation enzymes. The proteolytic activity of oligomeric Tysnd1 is in turn controlled by self-cleavage of Tysnd1 and degradation of Tysnd1 cleavage products by PsLon.