Peroxisomes are subcellular organelles with an indispensable role in cellular metabolism. The importance of peroxisomes for humans is stressed by the existence of a group of genetic diseases in humans in which there is an impairment in one or more peroxisomal functions. Most of these functions have to do with lipid metabolism including the alpha- and beta-oxidation of fatty acids. Here we describe the current state of knowledge about peroxisomal fatty acid alpha- and beta-oxidation with particular emphasis on the following: (1) the substrates beta-oxidized in peroxisomes; (2) the enzymology of the alpha- and beta-oxidation systems; (3) the permeability properties of the peroxisomal membrane and the role of the different transporters therein; (4) the interaction with other subcellular compartments, including the mitochondria, which are the ultimate site of NADH re-oxidation and full degradation of acetyl-CoA to CO(2) and water; and (5) the different disorders of peroxisomal alpha- and beta-oxidation.