The Escherichia coli AlkB protein and human homologs hABH2 and hABH3 are 2-oxoglutarate (2OG)/Fe(II)-dependent DNA/RNA demethylases that repair 1-methyladenine and 3-methylcytosine residues. Surprisingly, hABH1, which displays the strongest homology to AlkB, failed to show repair activity in two independent studies. Here, we show that hABH1 is a mitochondrial protein, as demonstrated using fluorescent fusion protein expression, immunocytochemistry, and Western blot analysis. A fraction is apparently nuclear and this fraction increases strongly if the fluorescent tag is placed at the N-terminal end of the protein, thus interfering with mitochondrial targeting. Molecular modeling of hABH1 based upon the sequence and known structures of AlkB and hABH3 suggested an active site almost identical to these enzymes. hABH1 decarboxylates 2OG in the absence of a prime substrate, and the activity is stimulated by methylated nucleotides. Employing three different methods we demonstrate that hABH1 demethylates 3-methylcytosine in single-stranded DNA and RNA in vitro. Site-specific mutagenesis confirmed that the putative Fe(II) and 2OG binding residues are essential for activity. In conclusion, hABH1 is a functional mitochondrial AlkB homolog that repairs 3-methylcytosine in single-stranded DNA and RNA.