Fungal sterol glucosyltransferases, which synthesize sterol glucoside (SG), contain a GRAM domain as well as a pleckstrin homology and a catalytic domain. The GRAM domain is suggested to play a role in membrane traffic and pathogenesis, but its significance in any biological processes has never been experimentally demonstrated. We describe herein that sterol glucosyltransferase (Ugt51/Paz4) is essential for pexophagy (peroxisome degradation), but not for macroautophagy in the methylotrophic yeast Pichia pastoris. By expressing truncated forms of this protein, we determined the individual contributions of each of these domains to pexophagy. During micropexophagy, the glucosyltransferase was associated with a recently identified membrane structure: the micropexophagic apparatus. A single amino acid substitution within the GRAM domain abolished this association as well as micropexophagy. This result shows that GRAM is essential for proper protein association with its target membrane. In contrast, deletion of the catalytic domain did not impair protein localization, but abolished pexophagy, suggesting that SG synthesis is required for this process.