Peroxiredoxin 6 (Prdx6), an enzyme with glutathione peroxidase and PLA2 (aiPLA2) activities, is highly expressed in respiratory epithelium, where it participates in phospholipid turnover and antioxidant defense. Prdx6 has been localized by immunocytochemistry and subcellular fractionation to acidic organelles (lung lamellar bodies and lysosomes) and cytosol. On the basis of their pH optima, we have postulated that protein subcellular localization determines the balance between the two activities of Prdx6. Using green fluorescent protein-labeled protein expression in alveolar epithelial cell lines, we showed Prdx6 localization to organellar structures resembling lamellar bodies in mouse lung epithelial (MLE-12) cells and lysosomes in A549 cells. Localization within lamellar bodies/lysosomes was in the luminal compartment. Targeting to lysosome-like organelles was abolished by the deletion of amino acids 31-40 from the Prdx6 NH2-terminal region; deletion of the COOH-terminal region had no effect. A green fluorescent protein-labeled peptide containing only amino acids 31-40 showed lysosomal targeting that was abolished by mutation of S32 or G34 within the peptide. Studies with mutated protein indicated that lipid binding was not necessary for Prdx6 targeting. This peptide sequence has no homology to known organellar targeting motifs. These studies indicate that the localization of Prdx6 in acidic organelles and consequent PLA2 activity depend on a novel 10-aa peptide located at positions 31-40 of the protein.