We report that polycyclic aromatic hydrocarbon (PAH)-inducible CYP1B1 is targeted to mitochondria by sequence-specific cleavage at the N terminus by a cytosolic Ser protease (polyserase 1) to activate the cryptic internal signal. Site-directed mutagenesis, COS-7 cell transfection, and in vitro import studies in isolated mitochondria showed that a positively charged domain at residues 41-48 of human CYP1B1 is part of the mitochondrial (mt) import signal. Ala scanning mutations showed that the Ser protease cleavage site resides between residues 37 and 41 of human CYP1B1. Benzo[a]pyrene (BaP) treatment induced oxidative stress, mitochondrial respiratory defects, and mtDNA damage that was attenuated by a CYP1B1-specific inhibitor, 2,3,4,5-tetramethoxystilbene. In support, the mitochondrial CYP1B1 supported by mitochondrial ferredoxin (adrenodoxin) and ferredoxin reductase showed high aryl hydrocarbon hydroxylase activity. Administration of benzo[a]pyrene or 2,3,7,8-tetrachlorodibenzodioxin induced similar mitochondrial functional abnormalities and oxidative stress in the lungs of wild-type mice and Cyp1a1/1a2-null mice, but the effects were markedly blunted in Cyp1b1-null mice. These results confirm a role for CYP1B1 in inducing PAH-mediated mitochondrial dysfunction. The role of mitochondrial CYP1B1 was assessed using A549 lung epithelial cells stably expressing shRNA against NADPH-cytochrome P450 oxidoreductase or mitochondrial adrenodoxin. Our results not only show conservation of the endoprotease cleavage mechanism for mitochondrial import of family 1 CYPs but also reveal a direct role for mitochondrial CYP1B1 in PAH-mediated oxidative and chemical damage to mitochondria.