Many Bacteria and Archaea employ the heterodisulfide reductase (Hdr)-like sulfur oxidation pathway. The relevant genes are inevitably associated with genes encoding lipoate-binding proteins (LbpA). Here, deletion of the gene identified LbpA as an essential component of the Hdr-like sulfur-oxidizing system in the Alphaproteobacterium Hyphomicrobium denitrificans. Thus, a biological function was established for the universally conserved cofactor lipoate that is markedly different from its canonical roles in central metabolism. LbpAs likely function as sulfur-binding entities presenting substrate to different catalytic sites of the Hdr-like complex, similar to the substrate-channeling function of lipoate in carbon-metabolizing multienzyme complexes, for example pyruvate dehydrogenase. LbpAs serve a specific function in sulfur oxidation, cannot functionally replace the related GcvH protein in Bacillus subtilis and are not modified by the canonical E. coli and B. subtilis lipoyl attachment machineries. Instead, LplA-like lipoate-protein ligases encoded in or in immediate vicinity of hdr-lpbA gene clusters act specifically on these proteins.