Mitochondrial membrane dynamics control the shape, number, and distribution of mitochondria and regulate energy production and cell health. In a screen for yeast mutants with increased levels of templated insertions (~10-1000 bp) in the nuclear genome, we identified mitochondrial fusion deficient mutants (mgm1Δ, ugo1Δ, fzo1Δ). We found that fusion mutants activate the iron regulon, have decreased iron-sulfur clusters (ISCs), and increased DNA damage, suggesting a role of iron homeostasis in preventing insertions. Consistently, a secondary screen found mutants affecting iron-sulfur cluster production (yfh1Δ, grx5Δ), vacuolar iron storage (ccc1Δ) or general iron homeostasis (aft1Δ) to exhibit high insertion levels. Treatment with iron chelators or hydrogen peroxide also increased insertions. We propose that iron dysregulation leading to oxidative DNA damage and compromised DNA repair drives insertions. These studies suggest that severe iron imbalance, associated with many human diseases and pharmacological treatments, can trigger genome instability in the form of templated insertions.