Frataxin is a nuclear-encoded mitochondrial protein widely conserved among eukaryotes. Human frataxin (fxn) is severely reduced in Friedreich ataxia (FRDA), a frequent autosomal recessive neuro- and cardio-degenerative disease. Whereas the function of fxn is unknown, the yeast frataxin homolog (Yfh1p) has been shown to be involved in mitochondrial iron homeostasis and protection from free radical toxicity. Evidence of iron accumulation and oxidative damage in cardiac tissue from FRDA patients suggests that fxn may have a similar function, but whether yeast and human frataxin actually have interchangeable roles in mitochondrial iron homeostasis is unknown. We show that a wild-type FRDA cDNA can complement Yfh1p-deficient yeast (yfh1 delta) by preventing the mitochondrial iron accumulation and oxidative damage associated with loss of Yfh1p. We analyze the functional effects of two FRDA point mutations, G130V and W173G, associated with a mild and a severe clinical presentation, respectively. The G130V mutation affects protein stability and results in low levels of mature (m) fxn, which are nevertheless sufficient to rescue yfh1 delta yeast. The W173G mutation affects protein processing and stability and results in severe m-fxn deficiency. Expression of the FRDA (W173G) cDNA in yfh1 delta yeast leads to increased levels of mitochondrial iron which are not as elevated as in Yfh1p-deficient cells but are above the threshold for oxidative damage of mitochondrial DNA and iron-sulfur centers, causing a typical yfh1 delta phenotype. These results demonstrate that fxn functions like Yfh1p, providing experimental support to the hypothesis that FRDA is a disorder of mitochondrial iron homeostasis.