Transglutaminase 2 (TG2) in the extracellular matrix is largely inactive but is transiently activated upon certain types of inflammation and cell injury. The enzymatic activity of extracellular TG2 thus appears to be tightly regulated. As TG2 is known to be sensitive to changes in the redox environment, inactivation through oxidation presents a plausible mechanism. Using mass spectrometry, we have identified a redox-sensitive cysteine triad consisting of Cys(230), Cys(370), and Cys(371) that is involved in oxidative inactivation of TG2. Within this triad, Cys(370) was found to participate in disulfide bonds with both Cys(230) and its neighbor, Cys(371). Notably, Ca(2+) was found to protect against formation of these disulfide bonds. To investigate the role of each cysteine residue, we created alanine mutants and found that Cys(230) appears to promote oxidation and inactivation of TG2 by facilitating formation of Cys(370)-Cys(371) through formation of the Cys(230)-Cys(370) disulfide bond. Although vicinal disulfide pairs are found in several transglutaminase isoforms, Cys(230) is unique for TG2, suggesting that this residue acts as an isoform-specific redox sensor. Our findings suggest that oxidation is likely to influence the amount of active TG2 present in the extracellular environment.