NPGPx is a member of the glutathione peroxidase (GPx) family; however, it lacks GPx enzymatic activity due to the absence of a critical selenocysteine residue, rendering its function an enigma. We report that NPGPx is a novel stress sensor that transmits oxidative stress signals by transferring the disulfide bond between its Cys57 and Cys86 residues to downstream effectors. Oxidized NPGPx binds and oxidizes the chaperone glucose-regulated protein (GRP)78 in the endoplasmic reticulum through covalent bonding between Cys86 of NPGPx and Cys41/Cys420 of GRP78, and facilitates the refolding of misfolded proteins by GRP78 to alleviate stress. NPGPx-deficient cells display impaired GRP78 chaperone activity, accumulate misfolded proteins, and suffer oxidative stress. Complete loss of NPGPx in animals causes systemic oxidative stress, increases carcinogenesis, and shortens lifespan. These results, for the first time, suggest that NPGPx is essential for mediating the oxidative stress response by modulating GRP78 chaperone activity to maintain physiological homeostasis.