DyP-type peroxidases comprise a novel superfamily of heme-containing peroxidases which is unrelated to the superfamilies of known peroxidases and of which only a few members have been characterized in some detail. Here, we report the identification and characterization of a DyP-type peroxidase (TfuDyP) from the thermophilic actinomycete Thermobifida fusca. Biochemical characterization of the recombinant enzyme showed that it is a monomeric, heme-containing, thermostable, and Tat-dependently exported peroxidase. TfuDyP is not only active as dye-decolorizing peroxidase as it also accepts phenolic compounds and aromatic sulfides. In fact, it is able to catalyze enantioselective sulfoxidations, a type of reaction that has not been reported before for DyP-type peroxidases. Site-directed mutagenesis was used to determine the role of two conserved residues. D242 is crucial for catalysis while H338 represents the proximal heme ligand and is essential for heme incorporation. A genome database analysis revealed that DyP-type peroxidases are frequently found in bacterial genomes while they are extremely rare in other organisms. Most of the bacterial homologs are potential cytosolic enzymes, suggesting metabolic roles different from dye degradation. In conclusion, the detailed biochemical characterization reported here contributes significantly to our understanding of these enzymes and further emphasizes their biotechnological potential.