Crystal structures of peroxisomal Arabidopsis thaliana 3-ketoacyl-CoA thiolase (AtKAT), an enzyme of fatty acid beta-oxidation, are reported. The subunit, a typical thiolase, is a combination of two similar alpha/beta domains capped with a loop domain. The comparison of AtKAT with the Saccharomyces cerevisiae homologue (ScKAT) structure reveals a different placement of subunits within the functional dimers and that a polypeptide segment forming an extended loop around the open catalytic pocket of ScKAT converts to alpha-helix in AtKAT, and occludes the active site. A disulfide is formed between Cys192, on this helix, and Cys138, a catalytic residue. Access to Cys138 is determined by the structure of this polypeptide segment. AtKAT represents an oxidized, previously unknown inactive form, whilst ScKAT is the reduced and active enzyme. A high level of sequence conservation is observed, including Cys192, in eukaryotic peroxisomal, but not mitochondrial or prokaryotic KAT sequences, for this labile loop/helix segment. This indicates that KAT activity in peroxisomes is influenced by a disulfide/dithiol change linking fatty acid beta-oxidation with redox regulation.