The mechanisms by which eukaryotic cells handle and distribute the essential micronutrient iron within the cytosol and other cellular compartments are only beginning to emerge. The yeast monothiol multidomain glutaredoxins (Grx) 3 and 4 are essential for both transcriptional iron regulation and intracellular iron distribution. Despite the fact that the mechanisms of iron metabolism differ drastically in fungi and higher eukaryotes, the glutaredoxins are conserved, yet their precise function in vertebrates has remained elusive. Here we demonstrate a crucial role of the vertebrate-specific monothiol multidomain Grx3 (PICOT) in cellular iron homeostasis. During zebrafish embryonic development, depletion of Grx3 severely impairs the maturation of hemoglobin, the major iron-consuming process. Silencing of human Grx3 expression in HeLa cells decreases the activities of several cytosolic Fe/S proteins, for example, iron-regulatory protein 1, a major component of posttranscriptional iron regulation. As a consequence, Grx3-depleted cells show decreased levels of ferritin and increased levels of transferrin receptor, features characteristic of cellular iron starvation. Apparently, Grx3-deficient cells are unable to efficiently use iron, despite unimpaired cellular iron uptake. These data suggest an evolutionarily conserved role of cytosolic monothiol multidomain glutaredoxins in cellular iron metabolism pathways, including the biogenesis of Fe/S proteins and hemoglobin maturation.