We have studied how Pex5p recognizes peroxisomal targeting signal type 1 (PTS1)-containing proteins. A randomly mutagenized pex5 library was screened in a two-hybrid setup for mutations that disrupted the interaction with the PTS1 protein Mdh3p or for suppressor mutations that could restore the interaction with Mdh3p containing a mutation in its PTS1. All mutations localized in the tetratricopeptide repeat (TPR) domain of Pex5p. The Pex5p TPR domain was modeled based on the crystal structure of a related TPR protein. Mapping of the mutations on this structural model revealed that some of the loss-of-interaction mutations consisted of substitutions in alpha-helices of TPRs with bulky amino acids, probably resulting in local misfolding and thereby indirectly preventing binding of PTS1 proteins. The other loss-of-interaction mutations and most suppressor mutations localized in short, exposed, intra-repeat loops of TPR2, TPR3, and TPR6, which are predicted to mediate direct interaction with PTS1 amino acids. Additional site-directed mutants at conserved positions in intra-repeat loops underscored the importance of the loops of TPR2 and TPR3 for PTS1 interaction. Based on the mutational analysis and the structural model, we put forward a model as to how PTS1 proteins are selected by Pex5p.