We have isolated a 1276-base pair cDNA from a rat heart cDNA library that encodes a novel thioredoxin (Trx2) of 166 amino acid residues with a calculated molecular mass of 18.2 kDa. Trx2 possesses the conserved thioredoxin-active site, Trp-Cys-Gly-Pro-Cys, but lacks structural cysteines present in all mammalian thioredoxins. Trx2 also differs from the previously described rat thioredoxin (Trx1) by the presence of a 60-amino acid extension at the N terminus. This extension has properties characteristic for a mitochondrial translocation signal, and the cleavage at a putative mitochondrial peptidase cleavage site would give a mature protein of 12.2 kDa. Western blot analysis from cytosolic, peroxisomal, and mitochondrial rat liver cell fractions confirmed mitochondrial localization of Trx2. Northern blot and reverse transcriptase-polymerase chain reaction analyses revealed that Trx2 hybridized to a 1.3-kilobase message, and it was expressed in several tissues with the highest expression levels in heart, muscle, kidney, and adrenal gland. N-terminally truncated recombinant protein was expressed in bacteria and characterized biochemically. Trx2 possessed a dithiol-reducing enzymatic activity and, with mammalian thioredoxin reductase and NADPH, was able to reduce the interchain disulfide bridges of insulin. Furthermore, Trx2 was more resistant to oxidation than Trx1.