Rat liver peroxisomes contain two multifunctional enzymes: (1) perMFE-1 [2-enoyl-CoA hydratase 1/Delta3,Delta2-enoyl-CoA isomerase/(S)-3-hydroxyacyl-CoA dehydrogenase] and (2) perMFE-2 [2-enoyl-CoA hydratase 2/(R)-3-hydroxyacyl-CoA dehydrogenase]. To investigate the role of the hydratase activity of perMFE-2 in beta-oxidation, a truncated version of perMFE-2 was expressed in Escherichia coli as a recombinant protein. The protein catalyses the hydration of straight-chain (2E)-enoyl-CoAs to (3R)-hydroxyacyl-CoAs, but it is devoid of hydratase 1 [(2E)-enoyl-CoA to (3S)-hydroxyacyl-CoA] and (3R)-hydroxyacyl-CoA dehydrogenase activities. The purified enzyme (46 kDa hydratase 2) can be stored as an active enzyme for at least half a year. The recombinant enzyme hydrates (24E)-3alpha,7alpha,12alpha-trihydroxy- 5beta-cholest-24-enoyl-CoA to (24R,25R)-3alpha,7alpha,12alpha, 24-tetrahydroxy-5beta-cholestanoyl-CoA, which has previously been characterized as a physiological intermediate in bile acid synthesis. The stereochemistry of the products indicates that the hydration reaction catalysed by the enzyme proceeds via a syn mechanism. A monofunctional 2-enoyl-CoA hydratase 2 has not been observed as a wild-type protein. The recombinant 46 kDa hydratase 2 described here survives in a purified form under storage, thus being the first protein of this type amenable to application as a tool in metabolic studies.