Pyocyanin (1-hydroxy-N-methylphenazine) is a cytotoxic pigment secreted by the bacterial species Pseudomonas aeruginosa, which frequently infects the lungs of immunosuppressed patients as well as those with cystic fibrosis. Pyocyanin toxicity results presumably from the ability of the compound to undergo reduction by NAD(P)H and subsequent generation of superoxide and H2O2 directly in the lungs. We report that in the presence of peroxidase mimics, microperoxidase 11, or hemin, pyocyanin undergoes oxidation by H2O2, as evidenced by loss of the pigment's characteristic absorption spectrum and by EPR detection of a free radical metabolite. The oxidation of pyocyanin is irreversible, suggesting an extensive modification of the pigment's phenazine chromophore. Oxidation of pyocyanin was observed also when exogenous H2O2 was replaced by a H2O2-generating system consisting of NADH and the pigment itself. That the oxidation involves the phenolate group of pyocyanin was verified by the observation that a related pigment, phenazine methosulfate, which is devoid of this group, does not undergo oxidation by microperoxidase 11/H2O2. In contrast to intact pyocyanin, oxidized pyocyanin was less efficient in NADH oxidation and stimulation of interleukin-8 release by human alveolar epithelial A549 cells in vitro, suggesting that oxidation of pyocyanin leads to its inactivation. This study demonstrates that pyocyanin may play a dual role in biological systems, first as an oxidant and ROS generator, and second as a substrate for peroxidases, contributing to H2O2 removal. This latter property may cause pyocyanin degradation and inactivation, which may be of considerable biomedical interest.