Sulfhydryl chemistry plays a vital role in normal biology and in defense of cells against oxidants, free radicals, and electrophiles. Modification of critical cysteine residues is an important mechanism of signal transduction, and perturbation of thiol-disulfide homeostasis is an important consequence of many diseases. A prevalent form of cysteine modification is reversible formation of protein mixed disulfides (protein-SSG) with glutathione (GSH). The abundance of GSH in cells and the ready conversion of sulfenic acids and S-nitroso derivatives to S-glutathione mixed disulfides suggests that reversible S-glutathionylation may be a common feature of redox signal transduction and regulation of the activities of redox sensitive thiol-proteins. The glutaredoxin enzyme has served as a focal point and important tool for evolution of this regulatory mechanism, because it is a specific and efficient catalyst of protein-SSG deglutathionylation. However, mechanisms of control of intracellular Grx activity in response to various stimuli are not well understood, and delineation of specific mechanisms and enzyme(s) involved in formation of protein-SSG intermediates requires further attention. A large number of proteins have been identified as potentially regulated by reversible S-glutathionylation, but only a few studies have documented glutathionylation-dependent changes in activity of specific proteins in a physiological context. Oxidative stress is a hallmark of many diseases which may interrupt or divert normal redox signaling and perturb protein-thiol homeostasis. Examples involving changes in S-glutathionylation of specific proteins are discussed in the context of diabetes, cardiovascular and lung diseases, cancer, and neurodegenerative diseases.