Frataxin is a nuclear-encoded mitochondrial protein which is deficient in Friedreich's ataxia, a hereditary neurodegenerative disease. Yeast mutants lacking the yeast frataxin homologue (Yfh1p) show iron accumulation in mitochondria and increased sensitivity to oxidative stress, suggesting that frataxin plays a critical role in mitochondrial iron homeostasis and free radical toxicity. Both Yfh1p and frataxin are synthesized as larger precursor molecules that, upon import into mitochondria, are subject to two proteolytic cleavages, yielding an intermediate and a mature size form. A recent study found that recombinant rat mitochondrial processing peptidase (MPP) cleaves the mouse frataxin precursor to the intermediate but not the mature form (Koutnikova, H., Campuzano, V., and Koenig, M. (1998) Hum. Mol. Gen. 7, 1485-1489), suggesting that a different peptidase might be required for production of mature size frataxin. However, in the present study we show that MPP is solely responsible for maturation of yeast and human frataxin. MPP first cleaves the precursor to intermediate form and subsequently converts the intermediate to mature size protein. In this way, MPP could influence frataxin function and indirectly affect mitochondrial iron homeostasis.