We developed a genetically encoded, highly specific fluorescent probe for detecting hydrogen peroxide (H₂O₂) inside living cells. This probe, named HyPer, consists of circularly permuted yellow fluorescent protein (cpYFP) inserted into the regulatory domain of the prokaryotic H₂O₂-sensing protein, OxyR. Using HyPer we monitored H₂O₂ production at the single-cell level in the cytoplasm and mitochondria of HeLa cells treated with Apo2L/TRAIL. We found that an increase in H₂O₂ occurs in the cytoplasm in parallel with a drop in the mitochondrial transmembrane potential (ΔΨ) and a change in cell shape. We also observed local bursts in mitochondrial H₂O₂ production during ΔΨ oscillations in apoptotic HeLa cells. Moreover, sensitivity of the probe was sufficient to observe H₂O₂ increase upon physiological stimulation. Using HyPer we detected temporal increase in H₂O₂ in the cytoplasm of PC-12 cells stimulated with nerve growth factor.