The ATP binding cassette (ABC) transporter Atm1p of the mitochondrial inner membrane performs crucial roles in both the biogenesis of cytosolic/nuclear iron-sulfur proteins and cellular iron homeostasis. Since the function of the mitochondrial iron-sulfur cluster (ISC) assembly machinery is also required for these two processes, Atm1p is thought to translocate a still unknown product of this pathway to the cytosol. Here, we provide a detailed in vitro characterization of Atm1p in order to better understand its function. Atm1p was purified using an expression system in E. coli. The detergent-solubilised protein exhibits a stable ATPase activity. Reconstitution of Atm1p into proteoliposomes allowed us to determine the biochemical characteristics of the ATPase such as: (i) the strong inhibition by the transition state analogue vanadate, (ii) a Km value of 0.1 mM, and (iii) a turnover number of 127 min-1. The ATPase activity of ABC transporters is generally stimulated by their specific substrate. We used this property to define the chemical properties of the substrate transported by Atm1p. ATPase hydrolysis by Atm1p-containing proteoliposomes was specifically increased 3-5-fold by thiol-containing compounds, in particular by micromolar concentrations of cysteine thiol groups in peptides, even though Atm1p is not a general peptide transporter such as yeast Mdl1p or mammalian TAP which share sequence similarity with Atm1p. We speculate that the physiological substrate of Atm1p may contain multiple sulfhydryl groups in a peptidic environment.