Nfs1p is the yeast homolog of the bacterial proteins NifS and IscS, enzymes that release sulfur from cysteine for iron-sulfur cluster assembly. Here we show that the yeast mitochondrial protein Nfs1p regulates cellular and mitochondrial iron homeostasis. A strain of Saccharomyces cerevisiae, MA14, with a missense NFS1 allele (I191S) was isolated in a screen for altered iron-dependent gene regulation. This mutant exhibited constitutive up-regulation of the genes of the cellular iron uptake system, mediated through effects on the Aft1p iron-regulatory protein. Iron accumulating in the mutant cells was retained in the mitochondrial matrix while, at the same time, iron-sulfur proteins were deficient. In this work, the yeast protein was localized to mitochondria, and the gene was shown to be essential for viability. Furthermore, Nfs1p in the MA14 mutant was found to be markedly decreased, suggesting that this low protein level produced the observed regulatory effects. This hypothesis was confirmed by experiments in which expression of wild-type Nfs1p from a regulated galactose-induced promoter was turned off, leading to recapitulation of the iron regulatory phenotypes characteristic of the MA14 mutant. These phenotypes include decreases in iron-sulfur protein activities coordinated with increases in cellular iron uptake and iron distribution to mitochondria.