Ergosterol synthesis is essential for cellular growth and viability of the budding yeast Saccharomyces cerevisiae, and intracellular sterol distribution and homeostasis are therefore highly regulated in this species. Erg25 is an iron-containing C4-methyl sterol oxidase that contributes to the conversion of 4,4-dimethylzymosterol to zymosterol, a precursor of ergosterol. The ERG29 gene encodes an endoplasmic reticulum (ER)-associated protein, and here we identified a role for Erg29 in the methyl sterol oxidase step of ergosterol synthesis. ERG29 deletion resulted in lethality in respiring cells, but respiration-incompetent (Rho- or Rho0) cells survived, suggesting that Erg29 loss leads to accumulation of oxidized sterol metabolites that affect cell viability. Down-regulation of ERG29 expression in Δerg29 cells indeed led to accumulation of methyl sterol metabolites, resulting in increased mitochondrial oxidants and a decreased ability of mitochondria to synthesize iron-sulfur (Fe-S) clusters due to reduced levels of Yfh1, the mammalian frataxin homolog, which is involved in mitochondrial iron metabolism. Using a high-copy genomic library, we identified suppressor genes that permitted growth of Δerg29 cells on respiratory substrates, and these included genes encoding the mitochondrial proteins Yfh1, Mmt1, Mmt2, and Pet20, which reversed all phenotypes associated with loss of ERG29 Of note, loss of Erg25 also resulted in accumulation of methyl sterol metabolites and also increased mitochondrial oxidants and degradation of Yfh1. We propose that accumulation of toxic intermediates of the methyl sterol oxidase reaction increases mitochondrial oxidants, which affect Yfh1 protein stability. These results indicate an interaction between sterols generated by ER proteins and mitochondrial iron metabolism.