The vulnerability of substantia nigral (SN) melaninized dopamine neurons to neurodegeneration in Parkinson's disease and the selective increases of iron and basal lipid peroxidation in SN indicate that iron-melanin interaction could be crucial to the pathogenesis of this disease. The present study describes, for the first time, the identification and characterization of a high-affinity (KD = 13 nM) and a lower affinity (KD = 200 nM) binding site for iron on dopamine melanin. The binding of iron to melanin is dependent on pH and the concentration of melanin. Iron chelators, U74500A, desferrioxamine, and to less extent 1,10-phenanthroline and chlorpromazine, but not the Parkinson-inducing neurotoxin, 1-methyl-4-phenyl-1,2,3,6-tetrahydropyridine, can inhibit the binding of iron to melanin and iron-induced lipid peroxidation. Although melanin alone diminishes basal lipid peroxidation in rat cortical homogenates, it can also potentiate that initiated by iron, a reaction inhibited by desferrioxamine. In the absence of an identifiable exogenous or endogenous neurotoxin in idiopathic Parkinson's disease, iron-melanin interaction in pars compacta of SN may be a strong candidate for the cytotoxic component of oxygen radical-induced neurodegeneration of melaninized dopamine neurons.