Reversible S-glutathionylation of proteins is a focal point of redox signaling and cellular defense against oxidative stress. This post-translational modification alters protein function, and its reversal (deglutathionylation) is catalyzed specifically and efficiently by glutaredoxin (GRx, thioltransferase), a thioldisulfide oxidoreductase. We hypothesized that changes in glutaredoxin might be important in the development of diabetic retinopathy, a condition characterized by oxidative stress. Indeed, GRx protein and activity were increased in retinal homogenates from streptozotocin-diabetic rats. Also, incubation of rat retinal Müller cells (rMC-1) in normal glucose (5 mm) or diabetic-like glucose (25 mm) medium led to selective upregulation of GRx in contrast to thioredoxin, the other thioldisulfide oxidoreductase system. Under analogous conditions, NF-kappaB (p50-p65) translocated to the nucleus, and expression of ICAM-1 (intercellular adhesion molecule-1), a transcriptional product of NF-kappaB, increased. Proinflammatory ICAM-1 is increased in diabetic retinae, and it is implicated in pathogenesis of retinopathy. To evaluate the role of GRx in mediating these changes, intracellular GRx content and activity in rMC-1 cells were increased independently under normal glucose via infection with an adenoviral GRx1 construct (Ad-GRx). rMC-1 cells exhibited adenovirus concentration-dependent increases in GRx and corresponding increases in NF-kappaB nuclear translocation, NF-kappaB luciferase reporter activity, and ICAM-1 expression. Blocking the increase in GRx1 via small interfering RNA in rMC-1 cells in high glucose prevented the increased ICAM-1 expression. These data suggest that redox regulation by glutaredoxin in retinal glial cells is perturbed by hyperglycemia, leading to NF-kappaB activation and a pro-inflammatory response. Thus, GRx may represent a novel therapeutic target to inhibit diabetic retinopathy.