Thioredoxins comprise a conserved family of redox regulators involved in many biological processes, including stress resistance and aging. We report that the C. elegans thioredoxin TRX-1 acts in ASJ head sensory neurons as a novel modulator of the insulin-like neuropeptide DAF-28 during dauer formation. We show that increased formation of stress-resistant, long-lived dauer larvae in mutants for the gene encoding the insulin-like neuropeptide DAF-28 requires TRX-1 acting in ASJ neurons, upstream of the insulin-like receptor DAF-2. Genetic rescue experiments demonstrate that redox-independent functions of TRX-1 specifically in ASJ neurons are needed for the dauer formation constitutive (Daf-c) phenotype of daf-28 mutants. GFP reporters of trx-1 and daf-28 show opposing expression patterns in dauers (i.e. trx-1 is up-regulated and daf-28 is down-regulated), an effect that is not observed in growing L2/L3 larvae. In addition, functional TRX-1 is required for the down-regulation of a GFP reporter of daf-28 during dauer formation, a process that is likely subject to DAF-28-mediated feedback regulation. Our findings demonstrate that TRX-1 modulates DAF-28 signaling by contributing to the down-regulation of daf-28 expression during dauer formation. We propose that TRX-1 acts as a fluctuating neuronal signaling modulator within ASJ neurons to monitor the adjustment of neuropeptide expression, including insulin-like proteins, during dauer formation in response to adverse environmental conditions.