Tissue transglutaminase (tTG) belongs to the family of transglutaminase enzymes that catalyze the posttranslational modification of proteins via Ca(2+)-dependent cross-linking reactions. The catalytic action of tTG results in the formation of an isopeptide bond that is of great physiological significance since it is highly resistant to proteolysis and denaturants. Although tTG-mediated cross-linking reactions have been implicated to play a role in diverse biological processes, the precise physiological function of the enzyme remains unclear. Recent data, however, suggest that the protein polymers resulting from tTG-catalyzed reactions may play a role in commitment of cells to undergo apoptosis. On the same token, tTG-mediated formation of insoluble protein aggregates may underlie the markers of numerous pathological conditions, such as the senile plaques in Alzheimer's disease and the Lewy bodies in Parkinson's disease. In addition to catalyzing Ca(2+)-dependent cross-linking reactions, tTG can also bind and hydrolyze guanosine triphosphate and adenosine triphosphate. By virtue of this ability, tTG has been identified as a novel G-protein that interacts and activates phospholipase C following stimulation of the alpha-adrenergic receptor. The ability of tTG to mediate signal transduction may contribute to its involvement in the regulation of cell cycle progression. The following review summarizes the important features of this multifunctional enzyme that have emerged as a result of recent work from different laboratories.