Mitochondrial topoisomerase I is a genetically distinct mitochondria-dedicated enzyme with a crucial but so far unknown role in the homeostasis of mitochondrial DNA metabolism. Here, we present data suggesting a negative regulatory function in mitochondrial transcription or transcript stability. Deficiency or depletion of mitochondrial topoisomerase I increased mitochondrial transcripts, whereas overexpression lowered mitochondrial transcripts, depleted respiratory complexes I, III and IV, decreased cell respiration and raised superoxide levels. Acute depletion of mitochondrial topoisomerase I triggered neither a nuclear mito-biogenic stress response nor compensatory topoisomerase IIβ upregulation, suggesting the concomitant increase in mitochondrial transcripts was due to release of a local inhibitory effect. Mitochondrial topoisomerase I was co-immunoprecipitated with mitochondrial RNA polymerase. It selectively accumulated and rapidly exchanged at a subset of nucleoids distinguished by the presence of newly synthesized RNA and/or mitochondrial RNA polymerase. The inactive Y559F-mutant behaved similarly without affecting mitochondrial transcripts. In conclusion, mitochondrial topoisomerase I dampens mitochondrial transcription and thereby alters respiratory capacity. The mechanism involves selective association of the active enzyme with transcriptionally active nucleoids and a direct interaction with mitochondrial RNA polymerase. The inhibitory role of topoisomerase I in mitochondrial transcription is strikingly different from the stimulatory role of topoisomerase I in nuclear transcription.