Glutaredoxins are thiol oxidoreductases that regulate protein redox state. In Saccharomyces cerevisiae, Grx1 and Grx2 are cytosolic dithiol glutaredoxins, whereas Grx3, Grx4, and Grx5 are monothiol glutaredoxins. Grx5 locates at the mitochondrial matrix and is needed for iron/sulfur cluster biogenesis. Its absence causes phenotypes such as inactivation of iron/sulfur enzymes and sensitivity to oxidative stress. Whereas Grx5 contains a single glutaredoxin domain, in Grx3 and Grx4 a thioredoxin-like domain is fused to the glutaredoxin domain. Here we have shown that Grx3 locates at the nucleus and that the thioredoxin-like domain is required for such location. We have addressed the functional divergence among glutaredoxins by targeting Grx2/3/4 molecules to the mitochondrial matrix using the Grx5 targeting sequence. The mitochondrial forms of Grx3 and Grx4 partially rescue the defects of a grx5 null mutant. On the contrary, mitochondrially targeted Grx2 does not suppress the mutant phenotype. Both the thioredoxin-like and glutaredoxin domains are needed for the mitochondrial activity of Grx3, although none of the cysteine residues at the thioredoxin-like domain is required for rescue of the grx5 phenotypes. We have concluded that dithiol glutaredoxins are functionally divergent from monothiol ones, but the latter can interchange their biological activities when compartment barriers are surpassed.