Friedreich's ataxia (FRDA) is the result of mutations in the nuclear-encoded frataxin gene, which is expressed in mitochondria. Several lines of evidence have suggested that frataxin is involved in mitochondrial iron homeostasis. We have transfected the frataxin gene into lymphoblasts of FRDA compound heterozygotes (FRDA-CH) with deficient frataxin expression to produce FRDA-CH-t cells in which message and protein are rescued to near-physiological levels. FRDA-CH cells were more sensitive to oxidative stress by challenge with free iron, hydrogen peroxide and the combination, consistent with a Fenton chemical mechanism of pathophysiology, and this sensitivity was rescued to control levels in FRDA-CH-t cells. Iron challenge caused increased mitochondrial iron levels in FRDA-CH cells, and a decreased mitochondrial membrane potential (MMP), both of which were rescued in FRDA-CH-t cells. The rescue of the low MMP, and high mitochondrial iron concentration by frataxin overexpression suggests that these cellular phenotypes are relevant to the central pathophysiological process in FRDA which is aggravated by exposure to free iron. However, even at physiological iron concentrations, FRDA-CH cells had decreased MMP as well as lower activities of aconitase and ICDH (two enzymes supporting MMP), and twice the level of filtrable mitochondrial iron (but no increase in total mitochondrial iron), and the observed phenotypes were either fully or partially rescued in FRDA-CH-t cells. Free iron is known to be toxic. The observation that frataxin deficiency (either directly or indirectly) causes an increase in filtrable mitochondrial iron provides a new hypothesis for the mechanism of cell death in this disease, and could be a target for therapy.