Cellular iron homeostasis is dominated by FBXL5-mediated degradation of iron regulatory protein 2 (IRP2), which is dependent on both iron and oxygen. However, how the physical interaction between FBXL5 and IRP2 is regulated remains elusive. Here, we show that the C-terminal substrate-binding domain of FBXL5 harbors a [2Fe2S] cluster in the oxidized state. A cryoelectron microscopy (cryo-EM) structure of the IRP2-FBXL5-SKP1 complex reveals that the cluster organizes the FBXL5 C-terminal loop responsible for recruiting IRP2. Interestingly, IRP2 binding to FBXL5 hinges on the oxidized state of the [2Fe2S] cluster maintained by ambient oxygen, which could explain hypoxia-induced IRP2 stabilization. Steric incompatibility also allows FBXL5 to physically dislodge IRP2 from iron-responsive element RNA to facilitate its turnover. Taken together, our studies have identified an iron-sulfur cluster within FBXL5, which promotes IRP2 polyubiquitination and degradation in response to both iron and oxygen concentrations.