Isoprenoids and isoprenoid derived compounds play an essential role in all living systems. All isoprenoids are derived from IPP and its isomer DMAPP. The isomerization reaction is catalyzed by isopentenyl diphosphate isomerase (IDI). Here we report the isolation of a full length cDNA coding for a novel IDI (IDI2) in humans. Chromosomal localization studies as well as significant sequence similarity at the nucleotide and amino acid level indicate that the novel isomerase is the product of a duplicated gene. In plants, this central reaction of isoprenoid biosynthesis is catalyzed by various highly conserved isozymes that differ in expression pattern and subcellular localization. In humans, real time PCR data has shown that IDI2 is expressed at high levels only in skeletal muscle. These results have been confirmed by Northern analysis. We propose that after the initial duplication IDI2 underwent a short phase of apparently random change, during which its active center became modified. Molecular modeling shows that despite a cysteine to serine change within the critical active site, IDI2 is likely to catalyze the isomerization of IPP to DMAPP. We have generated expression constructs in S.cerevisiae for IDI2. Our results indicate that, under in-vitro, assay conditions, IDI2 has the ability to catalyze the isomerization of ¹⁴C-IPP to ¹⁴C-DMAPP. Importantly, IDI2 can complement isomerase function in an idi1 deficient yeast strain. Kinetics on partially purified IDI2 indicate the novel isozyme has a maximal relative specific activity of 1.2 x 10^-1 +/- 0.3 µmol min ^-1 mg^-1 at pH 8.0 with a K^IPP m value of 22.8 µM IPP, values significantly lower than those reported for human IDI1. In addition, isomerase activity in purified IDI2 is affected differently by flavin dinucleotides and has a different requirement for the divalent metal Zn²⁺ than IDI1. We show that both IDI1 and IDI2 are localized to the peroxisome by a PTS1 dependent pathway. Moreover, while our results indicate that IDI1 is regulated by the SREBP pathway we show that IDI2 is regulated independently by a mechanism that may involve PPARα.