The CcGRXS12 gene protects plants from cellular oxidative damage that are caused by both biotic and abiotic stresses. The protein possesses GSH-disulphide oxidoreductase property but lacks Fe-S cluster assembly mechanism. Glutaredoxins (Grxs) are small, ubiquitous and multi-functional proteins. They are present in different compartments of plant cells. A chloroplast targeted Class I GRX (CcGRXS12) gene was isolated from Capsicum chinense during the pepper mild mottle virus (PMMoV) infection. Functional characterization of the gene was performed in Nicotiana benthamiana transgenic plants transformed with native C. chinense GRX (Nb:GRX), GRX-fused with GFP (Nb:GRX-GFP) and GRX-truncated for chloroplast sequences fused with GFP (Nb:Δ2MGRX-GFP). Overexpression of CcGRXS12 inhibited the PMMoV-I accumulation at the later stage of infection, accompanied with the activation of salicylic acid (SA) pathway pathogenesis-related (PR) transcripts and suppression of JA/ET pathway transcripts. Further, the reduced accumulation of auxin-induced Glutathione-S-Transferase (pCNT103) in CcGRXS12 overexpressing lines indicated that the protein could protect the plants from the oxidative stress caused by the virus. PMMoV-I infection increased the accumulation of pyridine nucleotides (PNs) mainly due to the reduced form of PNs (NAD(P)H), and it was high in Nb:GRX-GFP lines compared to other transgenic lines. Apart from biotic stress, CcGRXS12 protects the plants from abiotic stress conditions caused by H2O2 and herbicide paraquat. CcGRXS12 exhibited GSH-disulphide oxidoreductase activity in vitro; however, it was devoid of complementary Fe-S cluster assembly mechanism found in yeast. Overall, this study proves that CcGRXS12 plays a crucial role during biotic and abiotic stress in plants.