Protein disulfide isomerase (PDI) plays a central role in disulfide bond formation in the endoplasmic reticulum. It is implicated both in disulfide bond formation and in disulfide bond reduction and isomerization. To be an efficient catalyst of all three reactions requires complex mechanisms. These include mechanisms to modulate the pK(a) values of the active-site cysteines of PDI. Here, we examined the role of arginine 120 in modulating the pK(a) values of these cysteines. We find that arginine 120 plays a significant role in modulating the pK(a) of the C-terminal active-site cysteine in the a domain of PDI and plays a role in determining the reactivity of the N-terminal active-site cysteine but not via direct modulation of its pK(a). Mutation of arginine 120 and the corresponding residue, arginine 461, in the a' domain severely reduces the ability of PDI to catalyze disulfide bond formation and reduction but enhances the ability to catalyze disulfide bond isomerization due to the formation of more stable PDI-substrate mixed disulfides. These results suggest that the modulation of pK(a) of the C-terminal active cysteine by the movement of the side chain of these arginine residues into the active-site locales has evolved to allow PDI to efficiently catalyze both oxidation and isomerization reactions.