MutS homologues (MSHs) are critical components of the eukaryotic mismatch repair machinery. In addition to repairing mismatched DNA, mismatch repair enzymes are known in higher eukaryotes to directly signal cell cycle arrest and apoptosis in response to DNA-damaging agents. Accordingly, mammalian cells lacking certain MSHs are resistant to chemotherapeutic drugs. Interestingly, we have discovered that the disruption of TgMSH-1, an MSH in the pathogenic parasite, Toxoplasma gondii, confers drug resistance. Through a genetic selection for T. gondii mutants resistant to the antiparasitic drug monensin, we have isolated a strain that is resistant not only to monensin but also to salinomycin and the alkylating agent, methylnitrosourea. We have shown that this phenotype is due to the disruption of TgMSH-1 as the multidrug-resistance phenotype is complemented by a wild-type copy of TgMSH-1 and is recapitulated by a directed disruption of this gene in a wild-type strain. We have also shown that, unlike previously described MSHs involved in signalling, TgMSH-1 localizes to the parasite mitochondrion. These results provide the first example of a mitochondrial MSH that is involved in drug sensitivity and implicate the induction of mitochondrial stress as a mode of action of the widely used drug, monensin.