Mitochondria are the major site for the generation of ATP at the expense of molecular oxygen. Significant fractions (approximately 2%) of oxygen are converted to the superoxide radical and its reactive metabolites (ROS) in and around mitochondria. Although ROS have been known to impair a wide variety of biological molecules including lipids, proteins and DNA, thereby causing various diseases, they also play critical roles in the maintenance of aerobic life. Because mitochondria are the major site of free radical generation, they are highly enriched with antioxidants including GSH and enzymes, such as superoxide dismutase (SOD) and glutathione peroxidase, on both sides of their membranes to minimize oxidative stress in and around this organelle. The present work reviews the sites and mechanism of ROS generation by mitochondria, mitochondrial localization of Mn-SOD and Cu,Zn-SOD which has been postulated for a long time to be a cytosolic enzyme. The present work also describes that a cross-talk of molecular oxygen, nitric oxide (NO) and superoxide radicals regulates the circulation, energy metabolism, apoptosis, and functions as a major defense system against pathogens. Pathophysiological significance of ROS generation by mitochondria in the etiology of aging, cancer and degenerative neuronal diseases is also described.