Mitochondria harbor a conserved proteolytic system that mediates the complete degradation of organellar proteins. ATP-dependent proteases, like a Lon protease in the matrix space and m- and i-AAA proteases in the inner membrane, degrade malfolded proteins within mitochondria and thereby protect the cell against mitochondrial damage. Proteolytic breakdown products include peptides and free amino acids, which are constantly released from mitochondria. It remained unclear, however, whether the turnover of malfolded proteins involves only ATP-dependent proteases or also oligopeptidases within mitochondria. Here we describe the identification of Mop112, a novel metallopeptidase of the pitrilysin family M16 localized in the intermembrane space of yeast mitochondria. This peptidase exerts important functions for the maintenance of the respiratory competence of the cells that overlap with the i-AAA protease. Deletion of MOP112 did not affect the stability of misfolded proteins in mitochondria, but resulted in an increased release from the organelle of peptides, generated upon proteolysis of mitochondrial proteins. We find that the previously described metallopeptidase saccharolysin (or Prd1) exerts a similar function in the intermembrane space. The identification of peptides released from peptidase-deficient mitochondria by mass spectrometry indicates a dual function of Mop112 and saccharolysin: they degrade peptides generated upon proteolysis of proteins both in the intermembrane and matrix space and presequence peptides cleaved off by specific processing peptidases in both compartments. These results suggest that the turnover of mitochondrial proteins is mediated by the sequential action of ATP-dependent proteases and oligopeptidases, some of them localized in the intermembrane space.