Yeast flavohemoglobin, YHb, encoded by the nuclear gene YHB1, has been implicated in both the oxidative and nitrosative stress responses in Saccharomyces cerevisiae. Previous studies have shown that the expression of YHB1 is optimal under normoxic or hyperoxic conditions, yet respiring yeast cells have low levels of reduced YHb pigment as detected by carbon monoxide (CO) photolysis difference spectroscopy of glucose-reduced cells. Here, we have addressed this apparent discrepancy by determining the intracellular location of the YHb protein and analyzing the relationships between respiration, YHb level, and intracellular location. We have found that although intact respiration-proficient cells lack a YHb CO spectral signature, cell extracts from these cells have both a YHb CO spectral signature and nitric oxide (NO) consuming activity. This suggests either that YHb cannot be reduced in vivo or that YHb heme is maintained in an oxidized state in respiring cells. By using an anti-YHb antibody and CO difference spectroscopy and by measuring NO consumption, we have found that YHb localizes to two distinct intracellular compartments in respiring cells, the mitochondrial matrix and the cytosol. Moreover, we have found that the distribution of YHb between these two compartments is affected by the presence or absence of oxygen and by the mitochondrial genome. The findings suggest that YHb functions in oxidative stress indirectly by consuming NO, which inhibits mitochondrial respiration and leads to enhanced production of reactive oxygen species, and that cells can regulate intracellular distribution of YHb in accordance with this function.