Erv2p is a small, dimeric FAD-dependent sulfhydryl oxidase that generates disulfide bonds in the lumen of the endoplasmic reticulum. Mutagenic and structural studies suggest that Erv2p uses an internal thiol-transfer relay between the FAD-proximal active site cysteine pair (Cys121-Cys124) and a second cysteine pair (Cys176-Cys178) located in a flexible, substrate-accessible C-terminal tail of the adjacent dimer subunit. Here, we demonstrate that Cys176 and Cys178 are the only amino acids in the tail region required for disulfide transfer and that their relative positioning within the tail peptide is important for activity. However, intragenic suppressor mutations could be isolated that bypass the requirement for Cys176 and Cys178. These mutants were found to disrupt Erv2p dimerization and to increase the activity of Erv2p for thiol substrates such as glutathione. We propose that the two Erv2p subunits act together to direct the disulfide transfer to specific substrates. One subunit provides the catalytic domain composed of the active site cysteine residues and the FAD cofactor, while the second subunit appears to have two functions: it facilitates disulfide transfer to substrates via the tail cysteine residues, while simultaneously shielding the active site cysteine residues from non-specific reactions.