Two proteins co-operate in the proteolytic cleavage of mitochondrial precursor proteins: the mitochondrial processing peptidase (MPP) and the processing enhancing protein (PEP). In order to understand the structure and function of this novel peptidase, we have isolated mutants of Saccharomyces cerevisiae which were temperature sensitive in the processing of mitochondrial precursor proteins. Here we report on the mif2 mutation which is deficient in MPP. Mitochondria from the mif2 mutant were able to import precursor proteins, but not to cleave the presequences. The MPP gene was isolated. MPP is a hydrophilic protein consisting of 482 amino acids. Notably, MPP exhibits remarkable sequence similarity to PEP. We speculate that PEP and MPP have a common origin and have evolved into two components with different but mutually complementing functions in processing of precursor proteins.