In eukaryotes, each subcellular compartment harbors a specific group of proteins that must accomplish specific tasks. Nfs1 is a highly conserved mitochondrial cysteine desulfurase that participates in iron-sulfur cluster assembly as a sulfur donor. Previous genetic studies, in Saccharomyces cerevisiae, have suggested that this protein distributes between the mitochondria and the nucleus with biochemically undetectable amounts in the nucleus (termed "eclipsed distribution"). Here, we provide direct evidence for Nfs1 nuclear localization (in addition to mitochondria) using both ␣-complementation and subcellular fractionation. We also demonstrate that mitochondrial and nuclear Nfs1 are derived from a single translation product. Our data suggest that the Nfs1 distribution mechanism involves at least partial entry of the Nfs1 precursor into mitochondria, and then retrieval of a minor subpopulation (probably by reverse translocation) into the cytosol and then the nucleus. To further elucidate the mechanism of Nfs1 distribution we determined the N-terminal mitochondrial sequence of Nfs1 by Edman degradation. This led to the discovery of a novel mitochondrial processing enzyme, Icp55. This enzyme removes three amino acids from the N terminus of Nfs1 after cleavage by mitochondrial processing peptidase. Intriguingly, Icp55 protease (like its substrate Nfs1) appears to be dual distributed between the nucleus and mitochondria.Eclipsed distribution is a specific case of the dual protein subcellular localization in which one compartment contains the vast majority of a specific protein while a second compartment contains only a minute (eclipsed) amount (1-3). Therefore, eclipsed distributed proteins are hard to detect, and it is hard to discriminate between the specific functions of each isoprotein. For example, aconitase, a well characterized mitochondrial protein that participates in the tricarboxylic acid cycle, has been recently shown to be present in minute amounts in the cytosol, where it is crucial for the function of the glyoxylate shunt (2, 3).The protein NifS was first identified and characterized in Azotobacter vinelandii, as part of the nitrogen fixation (nif) operon (4). This enzyme is a pyridoxal 5Ј-phosphate-dependent cysteine desulfurase. In eukaryotes, an NifS-like protein termed Nfs1 has been identified, which shows a highly conserved sequence homology. The Saccharomyces cerevisiae mitochondrial Nfs1 has been shown to participate in iron-sulfur cluster assembly (5). Nakai and coworkers identified an NLS 5 -like sequence, RRRPR, in the mature sequence of yeast Nfs1, that is highly conserved in eukaryotic Nfs1 proteins (e.g. in yeast, mouse, and human) (6). When this NLS-like sequence was mutated to RRGSR, the mutant gene could not complement cell growth of a chromosomal NFS1-depleted strain. Nevertheless, this mutation did not affect the function of Nfs1 in the biogenesis of iron-sulfur proteins (5, 6). Nfs1 performs an additional function in the post-transcriptional modification of mitochondrial and cytosoli...