The mouse mutant mnd2 (motor neuron degeneration 2) exhibits muscle wasting, neurodegeneration, involution of the spleen and thymus, and death by 40 days of age. Degeneration of striatal neurons, with astrogliosis and microglia activation, begins at around 3 weeks of age, and other neurons are affected at later stages. Here we have identified the mnd2 mutation as the missense mutation Ser276Cys in the protease domain of the nuclear-encoded mitochondrial serine protease Omi (also known as HtrA2 or Prss25). Protease activity of Omi is greatly reduced in tissues of mnd2 mice but is restored in mice rescued by a bacterial artificial chromosome transgene containing the wild-type Omi gene. Deletion of the PDZ domain partially restores protease activity to the inactive recombinant Omi protein carrying the Ser276Cys mutation, suggesting that the mutation impairs substrate access or binding to the active site pocket. Loss of Omi protease activity increases the susceptibility of mitochondria to induction of the permeability transition, and increases the sensitivity of mouse embryonic fibroblasts to stress-induced cell death. The neurodegeneration and juvenile lethality in mnd2 mice result from this defect in mitochondrial Omi protease.