Hybrid cluster proteins (HCP) contain two types of Fe/S clusters, namely a [4Fe-4S]^2+/1+ or [2Fe-2S]^2+/1+ cluster and a novel type of hybrid cluster, [4Fe-2S-2O], in the as-isolated state. Although first isolated from anaerobic sulfate-reducing bacteria, the analysis of the genomic sequences reveals that genes encoding putative hybrid cluster proteins are present in a wide range of organisms, aerobic, anaerobic, or facultative, from the Bacteria, Archaea, and Eukarya domains. Despite a detailed spectroscopic and structural characterization, the precise physiological function of these proteins remained unknown. The present work shows that the transcription of the Escherichia coli hcp gene is induced by hydrogen peroxide, and this induction is regulated by the redox-sensitive transcriptional activator, OxyR. The E. coli hcp mutant strain exhibits higher sensitivity to hydrogen peroxide, a behavior that reverts to the wild type phenotype once a plasmid carrying the hcp gene is reintroduced. Furthermore, the purified HCPs from E. coli and Desulfovibrio desulfuricans ATCC 27774 show an alternative enzymatic activity, which under physiological conditions exhibited K_m values for hydrogen peroxide (∼0.3 mm) within the range of other peroxidases. Altogether, the results reveal that HCP is involved in oxidative stress protection.