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Despite their very close structural similarity, CxxC/S-type (class I) glutaredoxins (Grxs) actas oxidoreductases, while CGFS-type (class II) Grxs act as FeS cluster transferases. Here weshow that the key determinant of Grx function is a distinct loop structure adjacent to theactive site. Engineering of a CxxC/S-type Grx with a CGFS-type loop switched its functionfrom oxidoreductase to FeS transferase. Engineering of a CGFS-type Grx with a CxxC/S-typeloop abolished FeS transferase activity and activated the oxidative half reaction of the oxi-doreductase. The reductive half-reaction, requiring the interaction with a second GSHmolecule, was enabled by switching additional residues in the active site. We explain howsubtle structural differences, mostly depending on the structure of one particular loop, act inconcert to determine Grx function.