Cellular functions and survival are dependent on a tightly controlled redox potential. Currently, an increasing amount of data supports the concept of local changes in the redox environment and specific redox signaling events controlling cell function. Specific protein thiol groups are the major targets of redox signaling and regulation. Thioredoxins and glutaredoxins catalyze reversible thiol-disulfide exchange reactions and are primary regulators of the protein thiol redox state. Here, we demonstrate that embryonic brain development depends on the enzymatic activity of glutaredoxin 2. Zebrafish with silenced expression of glutaredoxin 2 lost virtually all types of neurons by apoptotic cell death and the ability to develop an axonal scaffold. As demonstrated in zebrafish and in a human cellular model for neuronal differentiation, glutaredoxin 2 controls axonal outgrowth via thiol redox regulation of collapsin response mediator protein 2, a central component of the semaphorin pathway. This study provides an example of a specific thiol redox regulation essential for vertebrate embryonic development.