A yeast peroxidase that reduces H202 and alkyl hydroperoxides with the use of reducing equivalents provided by thioredoxin was identified previously and named thioredoxin peroxidase (TPx) [Chae, H. Z., Chung, S. J., and Rhee, S. G. (1994) J. Biol. Chem. 269, 27670-27678]. A second type thioredoxin- dependent peroxidase, named type II TPx, has now been purified from yeast, and several peptide sequences have been obtained. Using those sequences, the corresponding cDNA has been identified from the GenBank database. Comparison of the predicted sequence of 176 amino acids of type II TPx with that of the 195 residues of TPx, now renamed type I TPx, revealed no substantial homology except for a short segment preceding Cys62 of type II TPx. Kinetic characterization of the reactions catalyzed by type I and II TPxs revealed that type I preferentially reduces H2O2 rather than alkyl hydroperoxides, whereas type II shows the reverse specificity. Type II TPx contains three cysteine residues at positions 31, 62, and 120. Experiments with mutant proteins in which these three cysteine residues were replaced individually with serine suggest that Cys62 - SH constitutes the site of oxidation by peroxides and that the oxidized Cys62 reacts with the Cys120 - SH group of another type II TPx molecule to form an intermolecular disulfide linkage. The formed disulfide can then be reduced by thioredoxin, but not by glutathione. Thus, type II TPx mutants lacking Cys62 or Cys120 showed no detectable TPx activity, whereas mutation of Cys31 had no effect on TPx activity. An antioxidant function of type II TPx in intact cells was demonstrated by the observation that Escherichia coli cells overexpressing wild-type protein were less sensitive to inhibition of growth by alkyl hydroperoxides than were control cells or cells overexpressing the mutant protein lacking Cys62.