Involved in oxidative stress response and redox homeostasis. Functions as a sensor and transducer of hydroperoxide stress. In response to hydroperoxide stress it oxidizes (activates) the transcription activator YAP1, which is involved in transcription activation of genes of the oxidative stress response pathway. May also play a direct role in hydroperoxide scavenging, being the most active of three closely related S.cerevisiae peroxiredoxins (GPX1, GPX2, and HYR1/GPX3) with respect to peroxide and lipid hydroperoxide reduction. The three enzymes are not required for the glutaredoxin-mediated antioxidant function. In the presence of peroxides, HYR1/GPX3 is directly oxidized at Cys-36 to form a cysteine sulfenic acid (-SOH). Cys-36-SOH then forms either an intramolecular disulfide bond (Cys-36 with Cys-82) or a transient, intermolecular disulfide bond with 'Cys-598' of YAP1, which is further resolved into a YAP1 intramolecular disulfide bond ('Cys-303' with 'Cys-598'), which causes its nuclear accumulation and activation, and a reduced Cys-36 in HYR1/GPX3. [thioredoxin]-dithiol + a hydroperoxide = [thioredoxin]-disulfide + an alcohol + H2O Interacts with YAP1 and probably YBP1. In contrast to the other two peroxiredoxins, HYR1/GPX3 expression is constitutive, not stress-induced. Sensitive to hydrogen peroxide and tert-butyl hydroperoxide (t-BHP). Present with 8000 molecules/cell in log phase SD medium. The active site is a conserved redox-active cysteine residue, the peroxidatic cysteine (C(P)), which makes the nucleophilic attack on the peroxide substrate. The peroxide oxidizes the C(P)-SH to cysteine sulfenic acid (C(P)-SOH), which then reacts with another cysteine residue, the resolving cysteine (C(R)), to form a disulfide bridge. The disulfide is subsequently reduced by an appropriate electron donor to complete the catalytic cycle. In this atypical 2-Cys peroxiredoxin, C(R) is present in the same subunit to form an intramolecular disulfide. Belongs to the glutathione peroxidase family. Was originally thought to be a glutathione peroxidase (PubMed:10480913) or a phospholipid hydroperoxide glutathione peroxidase (PubMed:11445588), but functions as an atypical 2-Cys peroxiredoxin using thioredoxin as reducing power instead (PubMed:12437921).