Mitochondrial function is critical for the survival of eukaryotes. Hence, mitochondrial dysfunctions are involved in numerous human diseases. An essential process for a normal mitochondrial function is mitochondrial gene expression which is tightly regulated in response to various physiological changes. The accurate control of mitochondrial gene expression is essential in order to provide the appropriate oxidative phosphorylation capacity for diverse metabolic demands. Recent findings in the basic mitochondrial replication and transcription regulation helped advance our understanding of organelle function and basic pathogenetic mechanisms of mitochondrial DNA mutations associated with oxidative phosphorylation defects. Mitochondrial transcription is regulated by the mitochondrial transcription termination factor (mTERF) both at the initiation and termination levels. A protein family containing highly conserved mTERF motifs has been identified recently and its members named generically as "terfins." In this work, one of these factors, mTERFD3, has been characterized in vitro and in vivo. The mTERFD3 protein is highly conserved throughout evolution. It is a mitochondrial protein localized to the matrix and is abundantly expressed in high energy demand tissues. We found that it contains 4 putative leucine zippers and is able to form dimers in vitro. We showed that mTERFD3 binds mtDNA at the transcription initiation site in the mtDNA regulatory region. These findings suggest that mTERFD3 may be involved in regulating mitochondrial gene expression at the transcriptional initiation level. In order to study the functional significance of mTERFD3 in vivo we developed a mouse deficient in mTERFD3 using a gene trapping strategy. The KO mice had a normal lifespan but showed decreased weight gain and decreased fat content in females. Fibroblasts isolated from KO mice displayed decreased growth rate when compared with WT in respiratory media, and had decreased complex IV activity. Consistent with the above findings, we found that muscle, one of the tissues with high energy demands, showed abnormal mitochondrial function, displaying features characteristic of mitochondrial myopathy such as decreased muscle strength and endurance. Muscle mitochondria of the KO mice showed a significant decrease in the complex II +III and complex IV activity. The decrease in OXPHOS complexes activity was associated with increased citrate synthase activity, suggesting mitochondrial proliferation, a feature typical for mitochondrial disorders. Another important finding was a decrease in the muscle mitochondrial transcripts in the KO animals associated with decreased steady state levels of OXPHOS subunits. Together these data suggest that mTERFD3 is a mitochondrial protein involved in the regulation of mtDNA transcription. mTERFD3 KO is not embryonic lethal suggesting that it is involved in the fine tuning of mitochondrial transcription. We conclude that mTERFD3 is a mitochondrial protein that modulates oxidative phosphorylation function, probably by directed interactions with the mtDNA regulatory region. This work shows the importance of mTERFD3, an mTERF family member, in the mitochondrial gene expression regulation.