Peroxiredoxins are ubiquitous enzymes which protect cells against oxidative stress. The first step of catalysis is common to all peroxiredoxins and results in oxidation of a conserved peroxidatic cysteine residue to sulfenic acid. This forms an intermolecular disulfide bridge in the case of 2-Cys peroxiredoxins, which is a substrate for the thioredoxin system. 1-Cys Prx's contain a peroxidatic cysteine but do not contain a second conserved cysteine residue, and hence the identity of the in vivo reduction system has been unclear. Here, we show that the yeast mitochondrial 1-Cys Prx1 is reactivated by glutathionylation of the catalytic cysteine residue and subsequent reduction by thioredoxin reductase (Trr2) coupled with glutathione (GSH). This novel mechanism does not require the usual thioredoxin (Trx3) redox partner of Trr2 for antioxidant activity, although in vitro assays show that the Trr2/Trx3 and Trr2/GSH systems exhibit similar capacities for supporting Prx1 catalysis. Our data also indicate that mitochondria are a main target of cadmium-induced oxidative stress and that Prx1 is particularly required to protect against mitochondrial oxidation. This study demonstrates a physiological reaction mechanism for 1-Cys peroxiredoxins and reveals a new role in protection against mitochondrial heavy metal toxicity.