Thioltransferase (or Grx) belongs to the oxidoreductase family and is known to regulate redox homeostasis in cells. Mitochondrial Grx2 is a recent discovery, but its function is largely unknown. In this study we investigate Grx2 function by examining its potential peroxidase activity using lens epithelial cells (LEC). cDNA for human and mouse Grx2 was cloned into pET21d(+) vector and used to produce respective recombinant Grx2 for kinetic studies. cDNA for human Grx2 was transfected into human LEC and used for in vivo studies. Both human and mouse Grx2 showed glutathione (GSH)‐dependent and thioredoxin reductase (TR)‐dependent peroxidase activity. The catalytic efficiency of human and mouse Grx2 was lower than that of glutathione peroxidases (2.5 and 0.8×10 4 s −1 M −1 , respectively), but comparable with TR‐dependent peroxiredoxins (16.5 and 2.7×10 4 s −1 M −1 , respectively). TR‐dependent peroxidase activity increased 2‐fold in the transfected cells and was completely abolished by addition of anti‐Grx2 antibody (Ab). Flow cytometry (FACS) analysis and confocal microscopy revealed that cells preloaded with pure Grx2 detoxified peroxides more efficiently. Grx2 over‐expression protected cells against H 2 O 2 ‐mediated disruption of mitochondrial transmembrane potential. These results suggest that Grx2 has a novel function as a peroxidase, accepting electrons both from GSH and TR. This unique property may play a role in protecting the mitochondria from oxidative damage.—Fernando, M. R., Lechner, J. M., Löfgren, S., Gladyshev, V. N., Lou, M. F. Mitochondrial thioltransferase (glutaredoxin 2) has GSH‐dependent and thioredoxin reductase‐dependent peroxidase activities in vitro and in lens epithelial cells. FASEB J. 20, E2240–E2248 (2006)