Thioredoxin reduction in chloroplasts is catalyzed by a unique class of disulfide reductases which use a [2Fe-2S]2+/+ ferredoxin as the electron donor and contain an Fe-S cluster as the sole prosthetic group in addition to the active-site disulfide. The nature, properties, and function of the Fe-S cluster in spinach ferredoxin:thioredoxin reductase (FTR) have been investigated by the combination of UV/visible absorption, variable-temperature magnetic circular dichroism (MCD), EPR, and resonance Raman (RR) spectroscopies. The results indicate the presence of an S = 0 [4Fe-4S]2+ cluster with complete cysteinyl-S coordination that cannot be reduced at potentials down to -650 mV, but can be oxidized by ferricyanide to an S = 1/2 [4Fe-4S]3+ state (g = 2.09, 2.04, 2.02). The midpoint potential for the [4Fe-4S]3+/2+ couple is estimated to be +420 mV (versus NHE). These results argue against a role for the cluster in mediating electron transport from ferredoxin (Em = -420 mV) to the active-site disulfide (Em = -230 mV, n = 2). An alternative role for the cluster in stabilizing the one-electron-reduced intermediate is suggested by parallel spectroscopic studies of a modified form of the enzyme in which one of the cysteines of the active-site dithiol has been alkylated with N-ethylmaleimide (NEM). NEM-modified FTR is paramagnetic as prepared and exhibits a slow relaxing, S = 1/2 EPR signal, g = 2.11, 2.00, 1.98, that is observable without significant broadening up to 150 K. While the relaxation properties are characteristic of a radical species, MCD, RR, and absorption studies indicate at least partial cluster oxidation to the [4Fe-4S]3+ state. Dye-mediated EPR redox titrations indicate a midpoint potential of -210 mV for the one-electron reduction to a diamagnetic state. By analogy with the properties of the ferricyanide-oxidized [4Fe-4S] cluster in Azotobacter vinelandii 7Fe ferredoxin [Hu, Z., Jollie, D., Burgess, B. K., Stephens, P. J., & Münck, E. (1994) Biochemistry 33, 14475-14485], the spectroscopic and redox properties of NEM-modified FTR are interpreted in terms of a [4Fe-4S]2+ cluster covalently attached through a cluster sulfide to a cysteine-based thiyl radical formed on one of the active-site thiols. A mechanistic scheme for FTR is proposed with similarities to that established for the well-characterized NAD(P)H-dependent flavin-containing disulfide oxidoreductases, but involving sequential one-electron redox processes with the role of the [4Fe-4S]2+ cluster being to stabilize the thiyl radical formed by the initial one-electron reduction of the active-site disulfide. The results indicate a new biological role for Fe-S clusters involving both the stabilization of a thiyl radical intermediate and cluster site-specific chemistry involving a bridging sulfide.