Proteins contain thiol-bearing cysteine residues that are sensitive to oxidation, and this may interfere with biological function either as 'damage' or in the context of oxidant-dependent signal transduction. Cysteine thiols oxidized to sulphenic acid are generally unstable, either forming a disulphide with a nearby thiol or being further oxidized to a stable sulphinic acid. Cysteine-sulphenic acids and disulphides are known to be reduced by glutathione or thioredoxin in biological systems, but cysteine-sulphinic acid derivatives have been viewed as irreversible protein modifications. Here we identify a yeast protein of relative molecular mass M(r) = 13,000, which we have named sulphiredoxin (identified by the US spelling 'sulfiredoxin', in the Saccharomyces Genome Database), that is conserved in higher eukaryotes and reduces cysteine-sulphinic acid in the yeast peroxiredoxin Tsa1. Peroxiredoxins are ubiquitous thiol-containing antioxidants that reduce hydroperoxides and control hydroperoxide-mediated signalling in mammals. The reduction reaction catalysed by sulphiredoxin requires ATP hydrolysis and magnesium, involving a conserved active-site cysteine residue which forms a transient disulphide linkage with Tsa1. We propose that reduction of cysteine-sulphinic acids by sulphiredoxin involves activation by phosphorylation followed by a thiol-mediated reduction step. Sulphiredoxin is important for the antioxidant function of peroxiredoxins, and is likely to be involved in the repair of proteins containing cysteine-sulphinic acid modifications, and in signalling pathways involving protein oxidation.