Wag31 of Mycobacterium tuberculosis belongs to the DivIVA family of proteins known to regulate cell morphology in Gram-positive bacteria. Here we demonstrate an unrecognized, novel role of Wag31 in oxidatively stressed mycobacteria. We report the cleavage of penicillin-binding protein 3 (PBP3) by the intramembrane metalloprotease Rv2869c (MSMEG_2579) in oxidatively stressed cells. Amino acids (102)A and (103)A of PBP3 are required for Rv2869c-mediated cleavage. Wag31(MTB), by virtue of its interaction with PBP3 through amino acid residues (46)NSD(48), protects it from oxidative stress-induced cleavage. PBP3 undergoes cleavage in Mycobacterium smegmatis (strain PM2) harbouring wag31(Delta(46)NSD(48)) instead of the wild type, with concomitant reduction in ability to withstand oxidative stress. Overexpression of Wag31(Delta(46)NSD(48)) attenuates the survival of M. tuberculosis in macrophages with concomitant cleavage of PBP3, and renders the organism more susceptible towards hydrogen peroxide as well as drugs which generate reactive oxygen species, namely isoniazid and ofloxacin. We propose that targeting Wag31 could enhance the activity of mycobactericidal drugs which are known to generate reactive oxygen species.