Peroxisomal beta-oxidation plays an important role in the metabolism of a wide range of substrates, including various fatty acids and the steroid side chain in bile acid synthesis. Two distinct thiolases have been implicated to function in peroxisomal beta-oxidation: the long known 41-kDa beta-ketothiolase identified by Hashimoto and co-workers (Hijikata, M., Ishii, N., Kagamiyama, H., Osumi, T., and Hashimoto, T. (1987) J. Biol. Chem. 262, 8151-8158) and the recently discovered 60-kDa SCPx thiolase, that consists of an N-terminal domain with beta-ketothiolase activity and a C-terminal moiety of sterol carrier protein-2 (SCP2, a lipid carrier or transfer protein). Recently, gene targeting of the SCP2/SCPx gene has shown in mice that the SCPx beta-ketothiolase is involved in peroxisomal beta-oxidation of 2-methyl-branched chain fatty acids like pristanic acid. In our present work we have investigated bile acid synthesis in the SCP2/SCPx knockout mice. Specific inhibition of beta-oxidation at the thiolytic cleavage step in bile acid synthesis is supported by our finding of pronounced accumulation in bile and serum from the knockout mice of 3alpha,7alpha, 12alpha-trihydroxy-27-nor-5beta-cholestane-24-one (which is a known bile alcohol derivative of the cholic acid synthetic intermediate 3alpha,7alpha,12alpha-trihydroxy-24-keto-cholestano yl-coenzyme A). Moreover, these mice have elevated concentrations of bile acids with shortened side chains (i.e. 23-norcholic acid and 23-norchenodeoxycholic acid), which may be produced via alpha- rather than beta-oxidation. Our results demonstrate that the SCPx thiolase is critical for beta-oxidation of the steroid side chain in conversion of cholesterol into bile acids.