We recently identified polynucleotide phosphorylase (PNPase) as a potential binding partner for the TCL1 oncoprotein. Mammalian PNPase exhibits exoribonuclease and poly(A) polymerase activities, and PNPase overexpression inhibits cell growth, induces apoptosis, and stimulates proinflammatory cytokine production. A physiologic connection for these anticancer effects and overexpression is difficult to reconcile with the presumed mitochondrial matrix localization for endogenous PNPase, prompting this study. Here we show that basal and interferon-beta-induced PNPase was efficiently imported into energized mitochondria with coupled processing of the N-terminal targeting sequence. Once imported, PNPase localized to the intermembrane space (IMS) as a peripheral membrane protein in a multimeric complex. Apoptotic stimuli caused PNPase mobilization following cytochrome c release, which supported an IMS localization and provided a potential route for interactions with cytosolic TCL1. Consistent with its IMS localization, PNPase knockdown with RNA interference did not affect mitochondrial RNA levels. However, PNPase reduction impaired mitochondrial electrochemical membrane potential, decreased respiratory chain activity, and was correlated with altered mitochondrial morphology. This resulted in FoF1-ATP synthase instability, impaired ATP generation, lactate accumulation, and AMP kinase phosphorylation with reduced cell proliferation. Combined, the data demonstrate an unexpected IMS localization and a key role for PNPase in maintaining mitochondrial homeostasis.