Transglutaminase 2 (TG2) is a multifunctional protein that can function as a transglutaminase, G protein, kinase, protein disulfide isomerase, and as an adaptor protein. These multiple biochemical activities of TG2 account for, at least in part, its involvement in a wide variety of cellular processes encompassing differentiation, cell death, inflammation, cell migration, and wound healing. The individual biochemical activities of TG2 are regulated by several cellular factors, including calcium, nucleotides, and redox potential, which vary depending on its subcellular location. Thus, the microenvironments of the subcellular compartments to which TG2 localizes, such as the cytosol, plasma membrane, nucleus, mitochondria, or extracellular space, are important determinants to switch on or off various TG2 biochemical activities. Furthermore, TG2 interacts with a distinct subset of proteins and/or substrates depending on its subcellular location. In this review, the biological functions and molecular interactions of TG2 will be discussed in the context of the unique environments of the subcellular compartments to which TG2 localizes.