Aggregation processes can cause severe perturbations of cellular homeostasis and are frequently associated with diseases. We performed a comprehensive analysis of mitochondrial quality and function in presence of misfolded, aggregation-prone polypeptides. Although we observed significant aggregate formation inside mitochondria, we observed only a minor impairment of mitochondrial function. We could show that detoxification of misfolded reporter polypeptides as well as endogenous proteins inside mitochondria takes place via their sequestration into the specific organellar deposit site Intra-Mitochondrial Protein Quality Control Compartment (IMiQC). Only minor amounts of co-aggregated proteins were associated with IMiQC and neither resolubilization nor degradation by the mitochondrial PQC system were observed. The single IMiQC aggregate deposit was not transferred to daughter cells during cell division. Detoxification of misfolded polypeptides via IMiQC formation was highly dependent on a functional mitochondrial fission machinery. We conclude that the formation of the aggregate deposit is an important mechanism to maintain full functionality of mitochondria under proteotoxic stress conditions.