This gene encodes a member of the acyl-CoA thioesterase protein family, and is one of four acyl-CoA hydrolase genes located in a cluster on chromosome 14. Alternative splicing results in multiple transcript variants. Acyl-CoA thioesterases, such as ACOT2, are a group of enzymes that hydrolyze Coenzyme A (CoA) esters, such as acyl-CoAs, bile CoAs, and CoA esters of prostaglandins, to the corresponding free acid and CoA. ACOT2 shows high acyl-CoA thioesterase activity on medium- and long-chain acyl-CoAs, with an optimal pH of 8.5. It is most active on myristoyl-CoA but also shows high activity on palmitoyl-CoA, stearoyl-CoA, and arachidoyl-CoA.