Although efforts have been made to identify circadian-controlled genes regulating cell cycle progression and cell death, little is known about the metabolic signals modulating circadian regulation of gene expression. We identify heme, an iron-containing prosthetic group, as a regulatory ligand controlling human Period-2 (hPer2) stability. Furthermore, we define a novel heme-regulatory motif within the C terminus of hPer2 (SC841PA) as necessary for heme binding and protein destabilization. Spectroscopy reveals that whereas the PAS domain binds to both the ferric and ferrous forms of heme, SC841PA binds exclusively to ferric heme, thus acting as a redox sensor. Consequently, binding prevents hPer2 from interacting with its stabilizing counterpart cryptochrome. In vivo, hPer2 downregulation is suppressed by inhibitors of heme synthesis or proteasome activity, while SA841PA is sufficient to stabilize hPer2 in transfected cells. Moreover, heme binding to the SC841PA motif directly impacts circadian gene expression, resulting in altered period length. Overall, the data support a model where heme-mediated oxidation triggers hPer2 degradation, thus controlling heterodimerization and ultimately gene transcription.