All eukaryotes so far studied, including animals, plants, yeasts and trypanosomes, have two pathways to target proteins to peroxisomes. These two pathways are specific for the two types of peroxisome targeting signal (PTS) present on peroxisomal matrix proteins. Remarkably, the complete genome sequence of Caenorhabditis elegans lacks the genes encoding proteins specific for the PTS2 targeting pathway. Here we show, by expression of green fluorescent protein (GFP) reporters for both pathways, that the PTS2 pathway is indeed absent in C. elegans. Lack of this pathway in man causes severe disease due to mislocalization of PTS2-containing proteins. This raises the question as to how C. elegans has accommodated the absence of the PTS2 pathway. We found by in silico analysis that C. elegans orthologues of PTS2-containing proteins have acquired a PTS1. We propose that switching of targeting signals has allowed the PTS2 pathway to be lost in the phylogenetic lineage leading to C. elegans.