Peroxisomes are important metabolic organelles involved in the catabolism of several lipid classes, e.g. very-long-chain fatty acids. Malfunction or absence of peroxisomes leads to accumulation of educts for peroxisomal β-oxidation and mitochondrial damage, resulting in fatal perturbation of metabolism. The impact of peroxisome deficiency on mitochondria is not elucidated yet. Here we present a model of Hepatocyte nuclear factor 4 (Hnf4)-induced lipotoxicity and accumulation of non-esterified fatty acids (NEFA) as the cause for mitochondrial damage in consequence of peroxisome loss in a Peroxin19 (pex19) mutant. Hyperactive Hnf4 signaling leads to upregulation of lipase 3 and enzymes for mitochondrial β-oxidation. This results in enhanced lipolysis, elevated concentrations of NEFA, maximal β-oxidation and mitochondrial swelling. NEFA are ligands for Hnf4 and further enhance its activity. By genetic removal of Hnf4 in pex19 mutants, lipotoxicity and mitochondrial swelling are reduced and their survival is rescued.