Mutations in PTEN-induced kinase 1 (PINK1) cause early onset autosomal recessive Parkinson's disease (PD). PINK1 is a 63 kDa protein kinase, which exerts a neuroprotective function and is known to localize to mitochondria. Upon entry into the organelle, PINK1 is cleaved to produce a ∼53 kDa protein (ΔN-PINK1). In this paper, we show that PINK1 is cleaved between amino acids Ala-103 and Phe-104 to generate ΔN-PINK1. We demonstrate that a reduced ability to cleave PINK1, and the consequent accumulation of full-length protein, results in mitochondrial abnormalities reminiscent of those observed in PINK1 knockout cells, including disruption of the mitochondrial network and a reduction in mitochondrial mass. Notably, we assessed three N-terminal PD-associated PINK1 mutations located close to the cleavage site and, while these do not prevent PINK1 cleavage, they alter the ratio of full-length to ΔN-PINK1 protein in cells, resulting in an altered mitochondrial phenotype. Finally, we show that PINK1 interacts with the mitochondrial protease presenilin-associated rhomboid-like protein (PARL) and that loss of PARL results in aberrant PINK1 cleavage in mammalian cells. These combined results suggest that PINK1 cleavage is important for basal mitochondrial health and that PARL cleaves PINK1 to produce the ΔN-PINK1 fragment.