Most proteins essential for the biogenesis of peroxisomes (peroxins) that are identified to date are associated with or are integral components of the peroxisomal membrane. A prerequisite in elucidating their function is to determine their topology in the membrane. We have developed a novel tool to analyze the topology of peroxisomal membrane proteins in the yeast Hansenula polymorpha in vivo using the 27-kDa NIa protease subunit from the tobacco etch virus (TEVp). TEVp specifically cleaves peptides containing the consensus sequence, EXXYXQ↓S (tev). We show that cytosolic TEVp and peroxisomal TEVp.SKL are selectively active on soluble cytosolic and peroxisomal tev-containing proteins in vivo, respectively, without affecting the viability of the yeast cells. The tev sequence was introduced in between the primary sequence of the peroxisomal membrane proteins Pex3p or Pex10p and the reporter protein enhanced green fluorescent protein (eGFP). Co-synthesis of these functional tev-GFP tagged proteins with either cytosolic TEVp or peroxisomal TEVp.SKL revealed that the C termini of Pex3p and Pex10p are exposed to the cytosol. Additional applications of the TEV protease to study peroxisome biogenesis are discussed.