Mutations in pitrilysin metallopeptidase 1 (PITRM1), a mitochondrial protease involved in mitochondrial precursor processing and degradation, result in a slow-progressive syndrome, characterized by cerebellar ataxia, psychotic episodes and obsessive behavior as well as cognitive decline. To investigate the pathogenetic mechanisms of mitochondrial presequence processing, we employed cortical neurons and cerebral organoids generated from PITRM1 knockout human induced pluripotent stem cells (iPSCs). PITRM1 deficiency strongly induced mitochondrial unfolded protein response (UPRmt) and enhanced mitochondrial clearance in iPSC-derived neurons. Furthermore, we observed increased levels of amyloid precursor protein and amyloid β in PITRM1 knockout neurons. However, neither cell death nor protein aggregates were observed in 2D iPSC-derived cortical neuronal cultures. On the contrary, cerebral organoids generated from PITRM1 knockout iPSCs spontaneously developed over time pathological features of Alzheimer’s disease (AD), including accumulation of protein aggregates, tau pathology, and neuronal cell death. Importantly, we provide evidence for a protective role of UPRmt and mitochondrial clearance against impaired mitochondrial presequence processing and proteotoxic stress. In summary, we propose a novel concept of PITRM1-linked neurological syndrome whereby defects of mitochondrial presequence processing induce an early activation of UPRmt that, in turn, modulates cytosolic quality control pathways. Thus our work supports a mechanistic link between mitochondrial function and common neurodegenerative proteinopathies.