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Glutathione (GSH) degradation plays an essential role in GSH homeostasis, which regulates cell survival, especially in cancer cells. Among human GSH degradation enzymes, the ChaC2 enzyme acts on GSH to form 5-l-oxoproline and Cys-Gly specifically in the cytosol. Here, we report the crystal structures of ChaC2 in two different conformations and compare the structural features with other known γ-glutamylcyclotransferase enzymes. The unique flexible loop of ChaC2 seems to function as a gate to achieve specificity for GSH binding and regulate the constant GSH degradation rate. Structural and biochemical analyses of ChaC2 revealed that Glu74 and Glu83 play crucial roles in directing the conformation of the enzyme and in modulating the enzyme activity. Based on a docking study of GSH to ChaC2 and binding assays, we propose a substrate-binding mode and catalytic mechanism. We also found that overexpression of ChaC2, but not mutants that inhibit activity of ChaC2, significantly promoted breast cancer cell proliferation, suggesting that the GSH degradation by ChaC2 affects the growth of breast cancer cells. Our structural and functional analyses of ChaC2 will contribute to the development of inhibitors for the ChaC family, which could effectively regulate the progression of GSH degradation-related cancers., Competing Interests: The authors declare no conflicts of interest.