The 2-cysteine peroxiredoxins (2-Cys Prx) constitute an ancient family of peroxide detoxifying enzymes and have acquired a plant-specific function in the oxygenic environment of the chloroplast. Immunocytochemical analysis and work with isolated intact chloroplasts revealed a reversible binding of the oligomeric form of 2-Cys Prx to the thylakoid membrane. The oligomeric form of the enzyme was enhanced under stress. The 2-Cys Prx has a broad substrate specificity with activity toward hydrogen peroxides and complex alkyl hydroperoxides. During the peroxide reduction reaction, 2-Cys Prx is alternatively oxidized and reduced as it catalyzes an electron flow from an electron donor to peroxide. Escherichia coli thioredoxin, but also spinach thioredoxin f and m were able to reduce oxidized 2-Cys Prx. The midpoint redox potential of -315 mV places 2-Cys Prx reduction after Calvin cycle activation and before switching the malate valve for export of excess reduction equivalents to the cytosol. Thus the 2-Cys Prx has a defined and preferential place in the hierarchy of photosynthetic electron transport. The activity of 2-Cys Prx also is linked to chloroplastic NAD(P)H metabolism as indicated by the presence of the reduced form of the enzyme after feeding dihydroxyacetone phosphate to intact chloroplasts. The function of the 2-Cys Prx is therefore not confined to its role in the water-water cycle pathway for energy dissipation in photosynthesis but also mediates peroxide detoxification in the plastids during the dark phase.