Glutaredoxins are small heat-stable proteins that act as glutathione-dependent disulfide oxidoreductases. Two genes, designated GRX1 and GRX2, which share 40-52% identity and 61-76% similarity with glutaredoxins from bacterial and mammalian species, were identified in the yeast Saccharomyces cerevisiae. Strains deleted for both GRX1 and GRX2 were viable but lacked heat-stable oxidoreductase activity using beta-hydroxyethylene disulfide as a substrate. Surprisingly, despite the high degree of homology between Grx1 and Grx2 (64% identity), the grx1 mutant was unaffected in oxidoreductase activity, whereas the grx2 mutant displayed only 20% of the wild-type activity, indicating that Grx2 accounted for the majority of this activity in vivo. Expression analysis indicated that this difference in activity did not arise as a result of differential expression of GRX1 and GRX2. In addition, a grx1 mutant was sensitive to oxidative stress induced by the superoxide anion, whereas a strain that lacked GRX2 was sensitive to hydrogen peroxide. Sensitivity to oxidative stress was not attributable to altered glutathione metabolism or cellular redox state, which did not vary between these strains. The expression of both genes was similarly elevated under various stress conditions, including oxidative, osmotic, heat, and stationary phase growth. Thus, Grx1 and Grx2 function differently in the cell, and we suggest that glutaredoxins may act as one of the primary defenses against mixed disulfides formed following oxidative damage to proteins.