Recent research has suggested that transmembrane protein 65 (TMEM65) is localized within the inner mitochondrial membrane. Little else is known about its function. In this study we investigated the location and function of TMEM65. Further, we report the functional consequences of a novel homozygous splice variant (c.472+1G>A) in the TMEM65 gene in a patient with mitochondrial encephalomyopathy. Here we investigated the location of TMEM65 by immunofluorescence staining of the protein and by immunoblotting of the isolated mitochondrial fractions in healthy fibroblasts and those from the patient. To study the function of TMEM65 we knocked down mRNA using TMEM65-specific siRNA, and measured mitochondrial function by enzymology, protein abundance and oxygen consumption rate in fibroblasts. Subcellular fractionation confirmed that the TMEM65 protein was present in the inner mitochondrial membrane. Knocking down TMEM65 expression in dermal fibroblasts severely affected mitochondrial content and respiration rate. Further evidence for the essential role of TMEM65 in mitochondrial function came from the demonstration of severe cellular and clinical consequences resulting from the novel TMEM65 gene mutation. In conclusion, these findings suggest that TMEM65, an inner mitochondrial membrane protein, plays a significant role in mitochondrial respiratory chain function. We also provide the first evidence that a mutation in the TMEM65 gene results in mitochondrial dysfunction and a severe mitochondrial encephalomyopathy phenotype.