Glutaredoxins are small proteins with a conserved active site (-CXX(C/S)-) and thioredoxin fold. These thiol disulfide oxidoreductases catalyze disulfide reductions, preferring GSH-mixed disulfides as substrates. We have developed a new real-time fluorescence-based method for measuring the deglutathionylation activity of glutaredoxins using a glutathionylated peptide as a substrate. Mass spectrometric analysis showed that the only intermediate in the reaction is the glutaredoxin-GSH mixed disulfide. This specificity was solely dependent on the unusual gamma-linkage present in glutathione. The deglutathionylation activity of both wild-type Escherichia coli glutaredoxin and the C14S mutant was competitively inhibited by oxidized glutathione, with K(i) values similar to the K(m) values for the glutathionylated peptide substrate, implying that glutaredoxin primarily recognizes the substrate via the glutathione moiety. In addition, wild-type glutaredoxin showed a sigmoidal dependence on GSH concentrations, the activity being significantly decreased at low GSH concentrations. Thus, under oxidative stress conditions, where the ratio of GSH/GSSG is decreased, the activity of glutaredoxin is dramatically reduced, and it will only have significant deglutathionylation activity once the oxidative stress has been removed. Different members of the protein disulfide isomerases (PDI) family showed lower activity levels when compared with glutaredoxins; however, their deglutathionylation activities were comparable with their oxidase activities. Furthermore, in contrast to the glutaredoxin-GSH mixed disulfide intermediate, the only intermediate in the PDI-catalyzed reaction was PDI peptide mixed disulfide.