Iron is an essential, yet at elevated concentrations toxic trace element. To date, the mechanisms of iron sensing by eukaryotic iron-responsive transcription factors are poorly understood. The Saccharomyces cerevisiae transcription factor Yap5, a member of the Yap family of bZIP stress response regulators, administrates the adaptive response to high-iron conditions. Despite the central role of the iron-sensing process for cell viability, the molecule perceived by Yap5 and the underlying regulatory mechanisms are unknown. Here, we show that Yap5 senses high-iron conditions by two Fe/S clusters bound to its activator domain (Yap5-AD). The more stable iron-regulatory Fe/S cluster at the N-terminal cysteine-rich domain (n-CRD) of Yap5 is detected in vivo and in vitro. The second cluster coordinated by the C-terminal CRD can only be shown after chemical reconstitution, since it is bound in a labile fashion. Both clusters are of the [2Fe-2S] type as characterized by UV/visible (UV/Vis), circular dichroism, electron paramagnetic resonance (EPR), and Mössbauer spectroscopy. Fe/S cluster binding to Yap5-AD induces a conformational change that may activate transcription. The cluster-binding motif of the n-CRD domain is highly conserved in HapX-like transcription factors of pathogenic fungi and thus may represent a general sensor module common to many eukaryotic stress response regulators.