Although a great deal is known biochemically about peroxiredoxins (Prxs), little is known about their real physiological function. We show here that two cytosolic yeast Prxs, cPrxI and II, which display diversity in structure and apparent molecular weights (MW), can act alternatively as peroxidases and molecular chaperones. The peroxidase function predominates in the lower MW forms, whereas the chaperone function predominates in the higher MW complexes. Oxidative stress and heat shock exposure of yeasts causes the protein structures of cPrxI and II to shift from low MW species to high MW complexes. This triggers a peroxidase-to-chaperone functional switch. These in vivo changes are primarily guided by the active peroxidase site residue, Cys 47, which serves as an efficient “H 2O 2-sensor” in the cells. The chaperone function of these proteins enhances yeast resistance to heat shock.