Parkinson's disease is characterized by the selective depletion of dopamine neurons in the substantia nigra, particular those containing neuromelanin. Involvement of neuromelanin in the pathogenesis may be either cytotoxic or protective. Recently we found that neuromelanin reduces the activity of 26S proteasome. In this paper, the detailed mechanisms behind the reduced activity were studied using neuromelanin isolated from the human brain. Neuromelanin increased the oxidative stress, but synthetic melanin did not. Superoxide dismutase and deferoxamine completely suppressed the increase, indicating that superoxide produced by an iron-mediated reaction plays a central role. Iron was shown to reduce in situ 26S proteasome activity in SH-SY5Y cells and the reduction was protected by antioxidants. These results suggest that iron released from neuromelanin increases oxidative stress in mitochondria, and then causes mitochondrial dysfunction and reduces proteasome function. The role of neuromelanin is discussed in relation to the selective vulnerability of dopamine neurons in Parkinson's disease.