We report here the identification of the Saccharomyces cerevisiae peroxisomal Delta3,Delta2-enoyl-CoA isomerase, an enzyme that is essential for the beta-oxidation of unsaturated fatty acids. The yeast gene YLR284C was identified in an in silico screen for genes that contain an oleate response element, a transcription factor-binding site common to most fatty acid-induced genes. Growth on oleic acid resulted in a significant increase in YLR284C mRNA, demonstrating that it is indeed an oleate-induced gene. The deduced product of YLR284C contains a type 1 peroxisomal targeting signal-like sequence at its C terminus and localizes to the peroxisome in a PEX8-dependent manner. Removal of YLR284C from the S. cerevisiae genome eliminated growth on oleic acid, but had no effect on peroxisome biogenesis, indicating a role for YLR284C in fatty acid metabolism. Cells lacking YLR284C had no detectable Delta3,Delta2-enoyl-CoA isomerase activity, and a bacterially expressed form of this protein catalyzed the isomerization of 3-cis-octenoyl-CoA to 2-trans-octenoyl-CoA with a specific activity of 16 units/mg. We conclude that YLR284C encodes the yeast peroxisomal Delta3,Delta2-enoyl-CoA isomerase and propose a new name, ECI1, to reflect its enoyl-CoA isomerase activity.