Mutations and deletions in the mitochondrial genome (mtDNA) cause human disease, and are thought to play an important role the aging process. Despite this, relatively little is known about how mitochondrial dysfunction leads to cellular pathology. We have used the budding yeast Saccharomyces cerevisiae as a model system to understand cellular consequences of mitochondrial dysfunction, and we have discovered a novel phenomenon that occurs when the mtDNA is damaged or lost. We found that loss of the mtDNA in yeast leads to a crisis characterized by a progressive onset of slow growth and cell inviability, and an increase in nuclear genomic instability. We found that this crisis is not caused by the loss of respiration, which is the most obvious consequence of mtDNA loss, but rather to a decrease in the mitochondrial membrane potential that occurs when cells lose their mtDNA. This in turn leads to decreased mitochondrial protein import, and loss of function in non-respiratory mitochondrial processes. Expression analysis of cells going through this crisis suggested a defect in an evolutionarily conserved process that occurs in the mitochondrial matrix: the biogenesis of iron-sulfur cluster (ISC) proteins. This mitochondrial pathway is essential because of its requirement for the function of non-mitochondrial ISC proteins, several of which have important roles in nuclear genome maintenance. We find that down-regulation of non-mitochondrial ISC protein biogenesis leads to a similar phenotype of progressive slow growth and increased nuclear recombination. While it has been known for decades that the phenotype of cells without mtDNA in yeast is not fully explained by the loss of respiration, this is to our knowledge the first identification of a specific mitochondrial pathway that is altered in these cells, and how this alteration leads to cellular dysfunction, including nuclear genomic instability. The role of the mtDNA in maintaining the mitochondrial membrane potential, as well as the essential role of the mitochondria in iron-sulfur cluster biogenesis, are both conserved from yeast cells to human cells. This raises the possibility that dysfunctional iron metabolism could play a role in human mitochondrial disease.