The yeast transcriptional regulator Yap1p is a key determinant in oxidative stress resistance. This protein is found in the cytoplasm under non-stressed conditions but rapidly accumulates in the nucleus following oxidant exposure. There it activates transcription of genes encoding antioxidants that return the redox balance of the cell to an acceptable range. Yap1p localization to the nucleus requires the oxidant-specific formation of disulfide bonds in the N-terminal cysteine-rich domain (N-CRD) and/or the C-terminal cysteine-rich domain (C-CRD). H(2)O(2) exposure triggers the formation of two interdomain disulfide bonds between the N-and C-CRDs. This dually disulfide-bonded structure has been argued to mask the nuclear export signal in the C-CRD that would otherwise prevent Yap1p nuclear accumulation. The C-CRD is required for wild-type H(2)O(2) tolerance but dispensable for resistance to diamide. The Saccharomyces cerevisiae TRX2 gene, encoding a thioredoxin protein, cannot be induced by H(2)O(2) in the presence of various mutant forms of Yap1p lacking the normally functioning C-CRD. In this work, we demonstrate that the proper folding of Yap1p in the presence of H(2)O(2) is required for recruitment of the mediator component Rox3p to the TRX2 promoter in addition to the nuclear accumulation of Yap1p during stress by this oxidant. These data demonstrate that the dually disulfide-bonded Yap1p N- and C-CRDs form a bifunctional protein domain controlling both nuclear localization and transcriptional activation.