The yeast transcription factor Ace2p regulates expression of the chitinase gene CTS1 in a cell cycle-dependent manner. Nuclear localisation of Ace2p is restricted to late M and early G phases of the mitotic cell cycle. We show here that this nuclear localisation is directly associated with regulation of CTS1 expression. Using a version of Ace2p tagged with a c-myc epitope, we show that the protein is excluded from the nucleus of cells during most phases of the mitotic cell cycle. A mutant derivative in which one threonine and two serine residues, which are candidate phosphorylation sites, were replaced by alanine (to mimic constitutive dephosphorylation) is localised in the nucleus throughout the cell cycle. The mechanism of localisation of Ace2p therefore involves regulation of its phosphorylation state, and closely resembles that used by the homologous transcription factor Swi5p. The wild-type Ace2 protein associates with Cdc28p in vivo, suggesting this may be the kinase that mediates the phosphorylation event. The stability of the protein is greatly reduced in a mutant that is constitutively localised to the nucleus, but is restored in a deletion derivative which remains in the cytoplasm. Ace2p is therefore controlled throughout the cell cycle at three levels: transcription, nuclear localisation, and proteolysis.