The role of the Saccharomyces cerevisae peroxisomal acyl-coenzyme A (acyl-CoA) thioesterase (Pte1p) in fatty acid beta-oxidation was studied by analyzing the in vitro kinetic activity of the purified protein as well as by measuring the carbon flux through the beta-oxidation cycle in vivo using the synthesis of peroxisomal polyhydroxyalkanoate (PHA) from the polymerization of the 3-hydroxyacyl-CoAs as a marker. The amount of PHA synthesized from the degradation of 10-cis-heptadecenoic, tridecanoic, undecanoic, or nonanoic acids was equivalent or slightly reduced in the pte1Delta strain compared with wild type. In contrast, a strong reduction in PHA synthesized from heptanoic acid and 8-methyl-nonanoic acid was observed for the pte1Delta strain compared with wild type. The poor catabolism of 8-methyl-nonanoic acid via beta-oxidation in pte1Delta negatively impacted the degradation of 10-cis-heptadecenoic acid and reduced the ability of the cells to efficiently grow in medium containing such fatty acids. An increase in the proportion of the short chain 3-hydroxyacid monomers was observed in PHA synthesized in pte1Delta cells grown on a variety of fatty acids, indicating a reduction in the metabolism of short chain acyl-CoAs in these cells. A purified histidine-tagged Pte1p showed high activity toward short and medium chain length acyl-CoAs, including butyryl-CoA, decanoyl-CoA and 8-methyl-nonanoyl-CoA. The kinetic parameters measured for the purified Pte1p fit well with the implication of this enzyme in the efficient metabolism of short straight and branched chain fatty acyl-CoAs by the beta-oxidation cycle.