α-Methylacyl-CoA racemase (Amacr) deficiency in humans leads to sensory motor neuronal and liver abnormalities. The disorder is recessively inherited and caused by mutations in the AMACR gene, which encodes Amacr, an enzyme presumed to be essential for bile acid synthesis and to participate in the degradation of methyl-branched fatty acids. To generate a model to study the pathophysiology in Amacr deficiency we inactivated the mouse Amacr gene. As per human Amacr deficiency, the Amacr^−/− mice showed accumulation (44-fold) of C27 bile acid precursors and decreased (over 50%) primary (C24) bile acids in bile, serum and liver, however the Amacr^−/− mice were clinically symptomless. Real-time quantitative PCR analysis showed that, among other responses, the level of mRNA for peroxisomal multifunctional enzyme type 1 (pMFE-1) was increased 3-fold in Amacr^−/− mice. This enzyme can be placed, together with CYP3A11 and CYP46A1, to make an Amacr-independent pathway for the generation of C24 bile acids. Exposure of Amacr^−/− mice to a diet supplemented with phytol, a source for branched-chain fatty acids, triggered the development of a disease state with liver manifestations, redefining the physiological significance of Amacr. Amacr is indispensable for the detoxification of dietary methyl-branched lipids and, although it contributes normally to bile acid synthesis from cholesterol, the putative pMFE-1-mediated cholesterol degradation can provide for generation of bile acids, allowing survival without Amacr. Based upon our mouse model, we propose elimination of phytol from the diet of patients suffering from Amacr deficiency.