The structure of glutaredoxin 2 (Grx2) from Escherichia coli co-crystallized with glutathione (GSH) was solved at 1.60 Å resolution. The structure of a mutant with the active-site residues Cys9 and Cys12 changed to serine crystallized in the absence of glutathione was solved to 2.4 Å resolution. Grx2 has an N-terminal domain characteristic of glutaredoxins, and the overall structure is congruent with the structure of glutathione S-transferases (GSTs). Purified Grx2 exhibited GST activity. Grx2, which is the physiological electron donor for arsenate reduction by E. coli ArsC, was docked with ArsC. The docked structure could be fitted with GSH bridging the active sites of the two proteins. It is proposed that Grx2 is a novel Grx/GST hybrid that functions in two steps of the ArsC catalytic cycle: as a GST it catalyzes glutathionylation of the ArsC–As(V) intermediate and as a glutaredoxin it catalyzes deglutathionylation of the ArsC–As(III)–SG intermediate.