Intramembrane‐cleaving peptidases of the rhomboid family regulate diverse cellular processes that are critical for development and cell survival. The function of the rhomboid protease PARL in the mitochondrial inner membrane has been linked to mitophagy and apoptosis, but other regulatory functions are likely to exist. Here, we identify the START domain‐containing protein STARD 7 as an intramitochondrial lipid transfer protein for phosphatidylcholine. We demonstrate that PARL ‐mediated cleavage during mitochondrial import partitions STARD 7 to the cytosol and the mitochondrial intermembrane space. Negatively charged amino acids in STARD 7 serve as a sorting signal allowing mitochondrial release of mature STARD 7 upon cleavage by PARL . On the other hand, membrane insertion of STARD 7 mediated by the TIM 23 complex promotes mitochondrial localization of mature STARD 7. Mitochondrial STARD 7 is necessary and sufficient for the accumulation of phosphatidylcholine in the inner membrane and for the maintenance of respiration and cristae morphogenesis. Thus, PARL preserves mitochondrial membrane homeostasis via STARD 7 processing and is emerging as a critical regulator of protein localization between mitochondria and the cytosol.