The cellular response to stress conditions involves a decision between survival or cell death when damage is severe. A conserved stress response in eukaryotes involves endonucleolytic cleavage of transfer RNAs (tRNAs). The mechanism and significance of such tRNA cleavage is unknown. We show that in yeast, tRNAs are cleaved by the RNase T2 family member Rny1p, which is released from the vacuole into the cytosol during oxidative stress. Rny1p modulates yeast cell survival during oxidative stress independently of its catalytic ability. This suggests that upon release to the cytosol, Rny1p promotes cell death by direct interactions with downstream components. Thus, detection of Rny1p, and possibly its orthologues, in the cytosol may be a conserved mechanism for assessing cellular damage and determining cell survival, analogous to the role of cytochrome c as a marker for mitochondrial damage.