The bacterial peroxiredoxin AhpC, a cysteine-dependent peroxidase, can be converted through a single amino acid insertion to a disulfide reductase, AhpC*, active in the glutathione and glutaredoxin pathway. Here we show that, whereas AhpC* is inactive as a peroxidase, other point mutants in AhpC can confer the in vivo disulfide reductase activity without abrogating peroxidase activity. Moreover, AhpC* and several point mutants tested in vitro exhibit an enhanced reductase activity toward mixed disulfides between glutathione and glutaredoxin (Grx-S-SG), consistent with the in vivo requirements for these components. Remarkably, this Grx-S-SG reductase activity relies not on the peroxidatic cysteine but rather on the resolving cysteine that plays only a secondary role in the peroxidase mechanism. Furthermore, putative conformational changes, which impart this unusual Grx-S-SG reductase activity, are transmissible across subunits. Thus, AhpC and potentially other peroxiredoxins in this widespread family can elaborate a new reductase function that alleviates disulfide stress.