Aims: As Candida albicans is the major fungal pathogen of humans, there is an urgent need to understand how this pathogen evades toxic reactive oxygen species (ROS) generated by the host immune system. A key regulator of antioxidant gene expression, and thus ROS resistance, in C. albicans is the AP-1-like transcription factor Cap1. Despite this, little is known regarding the intracellular signaling mechanisms that underlie the oxidation and activation of Cap1. Therefore, the aims of this study were; (i) to identify the regulatory proteins that govern Cap1 oxidation, and (ii) to investigate the importance of Cap1 oxidation in C. albicans pathogenesis. Results: In response to hydrogen peroxide (H2O2), but not glutathione-depleting/modifying oxidants, Cap1 oxidation, nuclear accumulation, phosphorylation, and Cap1-dependent gene expression, is mediated by a glutathione peroxidase-like enzyme, which we name Gpx3, and an orthologue of the Saccharomyces cerevisiae Yap1 binding protein, Ybp1. In addition, Ybp1 also functions to stabilise Cap1 and this novel function is conserved in S. cerevisiae. C. albicans cells lacking Cap1, Ybp1, or Gpx3, are unable to filament and thus, escape from murine macrophages after phagocytosis, and also display defective virulence in the Galleria mellonella infection model. Innovation: Ybp1 is required to promote the stability of fungal AP-1-like transcription factors, and Ybp1 and Gpx3 mediated Cap1-dependent oxidative stress responses are essential for the effective killing of macrophages by C. albicans. Conclusion: Activation of Cap1, specifically by H2O2, is a prerequisite for the subsequent filamentation and escape of this fungal pathogen from the macrophage.