The Saccharomyces cerevisiae peroxisomal membrane protein Pex11p has previously been implicated in peroxisome proliferation based on morphological observations of PEX11 mutant cells. Pex11p-deficient cells fail to increase peroxisome number in response to growth on fatty acids and instead accumulate a few giant peroxisomes. We report that mutants deficient in genes required for medium-chain fatty acid (MCFA) beta-oxidation display the same phenotype as Pex11p-deficient cells. Upon closer inspection, we found that Pex11p is required for MCFA beta-oxidation. Disruption of the PEX11 gene results in impaired formation of MCFA-CoA esters as measured in intact cells, whereas their formation is normal in cell lysates. The sole S. cerevisiae MCFA-CoA synthetase (Faa2p) remains properly localized to the inner leaflet of the peroxisomal membrane in PEX11 mutant cells. Therefore, the in vivo latency of MCFA activation observed in Pex11p-deficient cells suggests that Pex11p provides Faa2p with substrate. When PEX11 mutant cells are shifted from glucose to oleate-containing medium, we observed an immediate deficiency in beta-oxidation of MCFAs whereas giant peroxisomes and a failure to increase peroxisome abundance only became apparent much later. Our observations suggest that the MCFA oxidation pathway regulates the level of a signaling molecule that modulates the number of peroxisomal structures in a cell.