Epithelial-repair-dependent mucosal healing (MH) is associated with a more favorable prognosis for patients with inflammatory bowel disease (IBD). MH is accomplished via repair and regeneration of the intestinal epithelium. However, the mechanism underlying MH is ill defined. We found a striking upregulation of peroxisomes in the injured crypts of IBD patients. By increasing peroxisome levels in Drosophila midguts, we found that peroxisome elevation enhanced RAB7-dependent late endosome maturation, which then promoted stem and/or progenitor-cell differentiation via modulation of Janus Kinase (JAK) and Signal Transducer and Activator of Transcription (STAT)-SOX21A signaling. This in turn enhanced ISC-mediated regeneration. Importantly, RAB7 and SOX21 were upregulated in the crypts of IBD patients. Moreover, administration of drugs that increased peroxisome levels reversed the symptoms of dextran sulfate sodium (DSS)-induced colitis in mice. This study demonstrates a peroxisome-mediated epithelial repair mechanism, which opens a therapeutic avenue for the enhancement of MH in IBD patients.