The glutathione redox system, including the glutathione biosynthesis and glutathione regeneration reaction, has been found to play a critical role in the yeast Pichia pastoris during growth on methanol, and this regulation was at least partly executed by the transcription factor PpYap1. During adaptation to methanol medium, PpYap1 transiently localized to the nucleus and activated the expression of the glutathione redox system and upregulated glutathione reductase 1 (Glr1). Glr1 activates the regeneration of the reduced form of glutathione (GSH). Depletion of Glr1 caused a severe growth defect on methanol and hypersensitivity to formaldehyde (HCHO), which could be complemented by addition of GSH to the medium. Disruption of the genes for the HCHO-oxidizing enzymes PpFld1 and PpFgh1 caused a comparable phenotype, but disruption of the downstream gene PpFDH1 did not, demonstrating the importance of maintaining intracellular GSH levels. Absence of the peroxisomal glutathione peroxidase Pmp20 also triggered nuclear localization of PpYap1, and although cells were not sensitive to HCHO, growth on methanol was again severely impaired due to oxidative stress. Thus, the PpYap1-regulated glutathione redox system has two important roles, i.e., HCHO metabolism and detoxification of reactive oxygen species.