Heme (iron protoporphyrin IX) is a well-known prosthetic group for enzymes involved in metabolic pathways such as oxygen transport and electron transfer through the mitochondrial respiratory chain. However, heme has also been shown to be an important regulatory molecule (as “labile” heme) for diverse processes such as translation, kinase activity, and transcription in mammals, yeast, and bacteria. Taking advantage of a yeast strain deficient for heme production that enabled controlled modulation and monitoring of labile heme levels, here we investigated the role of labile heme in the regulation of mitochondrial biogenesis. This process is regulated by the HAP complex in yeast. Using several biochemical assays along with EM and epifluorescence microscopy, to the best of our knowledge, we show for the first time that cellular labile heme is critical for the post-translational regulation of HAP complex activity, most likely through the stability of the transcriptional co-activator Hap4p. Consequently, we found that labile heme regulates mitochondrial biogenesis and cell growth. The findings of our work highlight a new mechanism in the regulation of mitochondrial biogenesis by cellular metabolites.