Microsporidia are highly specialized obligate intracellular parasites of other eukaryotes (including humans) that show extreme reduction at the molecular, cellular and biochemical level. Although microsporidia have long been considered as early branching eukaryotes that lack mitochondria, they have recently been shown to contain a tiny mitochondrial remnant called a mitosome. The function of the mitosome is unknown, because microsporidians lack the genes for canonical mitochondrial functions, such as aerobic respiration and haem biosynthesis. However, microsporidial genomes encode several components of the mitochondrial iron-sulphur (Fe-S) cluster assembly machinery. Here we provide experimental insights into the metabolic function and localization of these proteins. We cloned, functionally characterized and localized homologues of several central mitochondrial Fe-S cluster assembly components for the microsporidians Encephalitozoon cuniculi and Trachipleistophora hominis. Several microsporidial proteins can functionally replace their yeast counterparts in Fe-S protein biogenesis. In E. cuniculi, the iron (frataxin) and sulphur (cysteine desulphurase, Nfs1) donors and the scaffold protein (Isu1) co-localize with mitochondrial Hsp70 to the mitosome, consistent with it being the functional site for Fe-S cluster biosynthesis. In T. hominis, mitochondrial Hsp70 and the essential sulphur donor (Nfs1) are still in the mitosome, but surprisingly the main pools of Isu1 and frataxin are cytosolic, creating a conundrum of how these key components of Fe-S cluster biosynthesis coordinate their function. Together, our studies identify the essential biosynthetic process of Fe-S protein assembly as a key function of microsporidian mitosomes.