In Saccharomyces cerevisiae, the mitochondrial inner membrane readily allows transport of cytosolic NAD+, but not NADPH, to the matrix. Pos5p is the only known NADH kinase in the mitochondrial matrix. The enzyme phosphorylates NADH to NADPH and is the major source of NADPH in the matrix. The importance of mitochondrial NADPH for cellular physiology is underscored by the phenotypes of the Δpos5 mutant, characterized by oxidative stress sensitivity and iron-sulfur (Fe-S) cluster deficiency. Fe-S clusters are essential cofactors of proteins such as aconitase [4Fe-4S] and ferredoxin [2Fe-2S] in mitochondria. Intact mitochondria isolated from wild-type yeast can synthesize these clusters and insert them into the corresponding apoproteins. Here, we show that this process of Fe-S cluster biogenesis in wild-type mitochondria is greatly stimulated and kinetically favored by the addition of NAD+ or NADH in a dose-dependent manner, probably via transport into mitochondria and subsequent conversion into NADPH. Unlike wild-type mitochondria, Δpos5 mitochondria cannot efficiently synthesize Fe-S clusters on endogenous aconitase or imported ferredoxin, although cluster biogenesis in isolated Δpos5 mitochondria is restored to a significant extent by a small amount of imported Pos5p. Interestingly, Fe-S cluster biogenesis in wild-type mitochondria is further enhanced by overexpression of Pos5p. The effects of Pos5p on Fe-S cluster generation in mitochondria indicate that one or more steps in the biosynthetic process require NADPH. The role of mitochondrial NADPH in Fe-S cluster biogenesis appears to be distinct from its function in anti-oxidant defense. © 2010 by The American Society for Biochemistry and Molecular Biology, Inc.