The physiological role of class III peroxidases (EC 1.11.1.7) in controlling plant growth and development has been investigated by overexpression of both native and heterologous peroxidases. However, it has remained an enigma as to why the phenotypes of different peroxidase over-expressing transgenics vary. In order to resolve the conflicting information about the consequences of peroxidase over-expression, we have explored the role of the subcellular targeting of HRP-C in controlling stem growth, root development, axillary branching and abiotic stress tolerance in tobacco (Nicotiana tabacum L.). Altering the sub-cellular targeting of vacuolar HRP-C, such that over-expressed peroxidase accumulates in the cytoplasm and cell wall, induced phenotypic changes that are typically associated with altered auxin homeostasis, and overexpression of cell wall located peroxidases. We conclude that sub-cellular targeting is a determinant of the phenotype of peroxidase over-expressing plants.