In photorespiration, leaf peroxisomes convert serine to glycerate via serine-glyoxylate aminotransferase and NADH-hydroxypyruvate reductase. We isolated intact spinach leaf peroxisomes in 0.25 M sucrose, and characterized their enzymatic conversion of serine to glycerate using physiological concentrations of substrates and coenzymes. In the presence of glycolate (glyoxylate), and NADH and NAD alone or together in physiological proportions, the rate of serine-to-glycerate conversion was enhanced and sustained by the addition of malate. The rate was similar at 1 and 5 mM serine, but was two to three times higher in 50 mM than 5 mM malate. In the presence of NAD and malate, there was 1:1 stoichiometric formation of glycerate and oxaloacetate. Addition of 1 or 5 mM glutamate resulted in a negligible enhancement of the conversion of hydroxypyruvate to glycerate. Intact peroxisomes produced glycerate from either serine or hydroxypyruvate at a rate two times higher than osmotically lysed peroxisomes. These results suggest that under physiological conditions, the peroxisomal malate dehydrogenase operates independent of aspartate-alpha-ketoglutarate aminotransferase in supplying NADH for hydroxypyruvate reduction. This supply of NADH is the rate-limiting step in the conversion of serine to glycerate. The compartmentation of hydroxypyruvate reductase and malate dehydrogenase in the peroxisomes confers a higher efficiency in the supply of NADH for hydroxypyruvate reduction under a normal, high NAD/NADH ratio in the cytosol.