In organisms, various protective mechanisms against oxidative damaging of proteins exist. Here, we show that cofactor binding is among these mechanisms, because flavin mononucleotide (FMN) protects Azotobacter vinelandii flavodoxin against hydrogen peroxide-induced oxidation. We identify an oxidation sensitive cysteine residue in a functionally important loop close to the cofactor, i.e., Cys69. Oxidative stress causes dimerization of apoflavodoxin (i.e., flavodoxin without cofactor), and leads to consecutive formation of sulfinate and sulfonate states of Cys69. Use of 7-chloro-4-nitrobenzo-2-oxa-1,3-diazole (NBD-Cl) reveals that Cys69 modification to a sulfenic acid is a transient intermediate during oxidation. Dithiothreitol converts sulfenic acid and disulfide into thiols, whereas the sulfinate and sulfonate forms of Cys69 are irreversible with respect to this reagent. A variable fraction of Cys69 in freshly isolated flavodoxin is in the sulfenic acid state, but neither oxidation to sulfinic and sulfonic acid nor formation of intermolecular disulfides is observed under oxidising conditions. Furthermore, flavodoxin does not react appreciably with NBD-Cl. Besides its primary role as redox-active moiety, binding of flavin leads to considerably improved stability against protein unfolding and to strong protection against irreversible oxidation and other covalent thiol modifications. Thus, cofactors can protect proteins against oxidation and modification.