In this study we investigated the molecular mechanism by which the Orp1 (Gpx3) protein in Saccharomyces cerevisiae senses and reacts with hydrogen peroxide. Upon exposure to H₂O₂ Orp1^C36 forms a disulfide bonded complex with the c-terminal domain of the Yap1 protein (Yap1-cCRD). We used 4-nitrobenzo-2-oxa-1,3-diazole (NBD-Cl) to identify a cysteine sulfenic acid (Cys-SOH) modification that forms on C36 of Orp1^C36 upon exposure to H₂O₂. Under similar conditions, neither C82 of Orp1^C82 nor C598 of Yap1 forms Cys-SOH. A homology-based molecular model of Orp1 suggests that the structure of the active site of Orp1 is similar to that found in mammalian selenocysteine glutathione peroxidases. Proposed active site residues Q70 and W125 form a catalytic triad with C36 in the Orp1 molecular model. The remainder of the active site pocket is formed by F38, N126 and F127, which are evolutionarily conserved residues. We made Q70A and W125A mutants and tested the ability of these mutants to form Cys-SOH in response to H₂O₂. Both mutants were unable to form Cys-SOH and did not form a H₂O₂ inducible disulfide bonded complex with Yap1-cCRD. The pKa of C36 was determined to be 5.1, which is 3.2 pH units lower than that of a free cysteine (8.3). In contrast, Orp1 C82 (the resolving cysteine) has a pKa value of 8.3. The pKa of C36 in the Q70A and W125A mutants is also 8.3, demonstrating the importance of these residues in modulating the nucleophilic character of C36. Lastly, we show that S. cerevisiae strains with ORP1 Q70A and W125A mutations are less tolerant to H₂O₂ than those containing wild-type ORP1. The results of our study suggest that attempts to identify novel redox regulated proteins and signal transduction pathways should focus on characterization of low pKa cysteines.