The Atg4 cysteine proteases play crucial roles in the processing of Atg8 proteins during autophagy, but their regulation during cellular stress and differentiation remains poorly understood. We have found that two Atg4 family members—Atg4C and Atg4D—contain cryptic mitochondrial targeting sequences immediately downstream of their canonical (DEVD) caspase cleavage sites. Consequently, caspase-cleaved Atg4D (ΔN63 Atg4D) localizes to the mitochondrial matrix when expressed in mammalian cells, where it undergoes further processing to a ~42 kDa mitochondrial form. Interestingly, caspase cleavage is not needed for Atg4D mitochondrial import, because ~42 kDa mitochondrial Atg4D is observed in cells treated with caspase inhibitors and in cells expressing caspase-resistant Atg4D (DEVA⁶³). Using HeLa cell lines stably expressing ΔN63 Atg4D, we showed that mitochondrial Atg4D sensitizes cells to cell death in the presence of the mitochondrial uncoupler, CCCP, and that mitochondrial cristae are less extensive in these cells. We further showed that the organization of mitochondrial cristae is altered during the mitochondrial clearance phase in differentiating primary human erythroblasts stably expressing ΔN63 Atg4D, and that these cells have elevated levels of mitochondrial reactive oxygen species (ROS) during late stages of erythropoiesis. Together these data suggest that the import of Atg4D during cellular stress and differentiation may play important roles in the regulation of mitochondrial physiology, ROS, mitophagy and cell viability.